Wireless technology maker Qualcomm, Inc. (NASDAQ:QCOM) is a leader in mmWave RF and stands to benefit from global carriers that are requiring smartphones to support the technology as part of the 5G upgrade cycle, according to BofA Securities.
The Qualcomm Analyst: Tal Liani maintains a Buy rating on Qualcomm's stock with a price target lifted from $100 to $115.
The Qualcomm Thesis: In addition to U.S. carriers requiring mmWave RF, countries like Japan and South Korea are ramping their mmWave deployment as well, Liani said in a Wednesday note. (See his track record here.)
Encouragingly, Qualcomm's management estimates its market share of the technology in 2020 stands at 100%, as it is the only vendor that offers an end-to-end, modem-to-antenna millimeter wave solution, the analyst said.
It is also the only RF vendor that can ship millimeter-wave solutions at large-scale production volumes, he said.
Qualcomm's exposure to Apple Inc. (NASDAQ:AAPL) alone could result in an incremental $3 billion from the 5G iPhone launch, Liani said.
It is likely the iPhone 5G will use Qualcomm's RF solution, as its chip supply contract with Broadcom Inc (NASDAQ:AVGO) isn't exclusive, the analyst said.
Third-party data from Strategy Analytics suggest millimeter wave-capable handsets will represent 25% to 75% of all 5G handsets through 2024, according to BofA.
Assuming Qualcomm holds a monopoly on the market in 2021 and sees its market share drop to 50% through 2024, Qualcomm faces a cumulative $17-billion revenue opportunity, Liani said.
BofA's firm's revised $115 price target is based on 18 times fiscal 2022 EPS estimates versus a prior multiple of 20 times on 2021 EPS estimates.
QCOM Price Action: Shares of Qualcomm were down 0.24% at $89.14 at the close Wednesday.