Loop Capital sees key headwinds easing as catalysts materialize for Qualcomm . The investment firm upgraded the semiconductor company to a buy rating from hold. Analyst Gary Mobley also hiked his price target to $185 from $140. That implies upside of 32%. Shares of Qualcomm are down 13% over the past 12 months and have tumbled 18% this year alone. QCOM 1Y mountain QCOM 1Y chart “There are many reasons why QCOM’s shares have underperformed the chip sector on a YTD, 1-yr-, 3-yr & 5-yr basis. Most obvious, the company is not a data center AI beneficiary, at least not yet. YTD, the share price underperformance has been fueled by a perfect storm of circumstances,” the analyst wrote. He added that, however, memory chips will not remain in short supply forever, and believes that the stock market should recover accordingly from this initial stock. When relief comes, Qualcomm shares should benefit, he wrote. Mobley also expects another catalyst to come from Qualcomm’s next analyst day, most likely to be held in early June. There, he believes the team will highlight progress in growing its non-smartphone revenue and provide more details on its data center roadmap. “This revenue diversity away from Smartphones should be key for QCOM shares to re-rate higher,” Mobley wrote. The analyst also foresees the company announcing another data center customer ahead of this analyst day. Mobley believes that several key headwinds facing Qualcomm should also ease by next year. For instance, the company’s sales to Samsung should stabilize, while chip shipments to Apple will fall below 10% of total revenue, meaning that Qualcomm’s declining chip sales to the iPhone maker will already be somewhat priced in. At the same time, the analyst believes that investors are likely to gain confidence as Qualcomm’s automotive and Internet of Things businesses grow to rival or surpass handset sales by fiscal 2029, marking a key milestone in the company’s diversification strategy.
