What Happened
JPMorgan analyst Samik Chatterjee maintained Qualcomm with an Overweight rating and $225 price target. The analyst expects easing supply and benefits of diversification to lead to both earnings upside and a rerating of the stock.Lebenthal’s Take
“I think the stock should be $210 right now,” Cerity Partners’ Jim Lebenthal said Monday on CNBC’s “Fast Money Halftime Report.”Lebenthal thinks Qualcomm deserves a 20 times earnings multiple. The stock is currently trading at about 17 times price to forward earnings, according to data from Benzinga Pro.
“The stock has been held back by the perception that it’s just a mobile phone company and that its fortunes are really tied to Apple, [but] it is rapidly diversifying away from just being handsets,” Lebenthal said.
Qualcomm is expanding into automotive and the IoT space, Lebenthal said, adding that automotive and IoT represented about 22 percent of Qualcomm’s revenues last year. He expects that automotive and IoT will represent roughly 30 percent of Qualcomm’s revenues in about three years.
Lebenthal told CNBC the stock should be trading at 20 times earnings because of this growth potential outside of handsets. He thinks the stock should be trading around the $210 level currently and will likely be trading around $230 in six months, following analyst reratings.
“This is likely to be a stock that the analysts fall all over themselves raising price targets.”
