Shares of Qualcomm Inc. (NASDAQ: QCOM) could surpass $60 in the first half of 2012, helped by 3G growth and strong smartphone adoption.
We remain believers in QCOM and think shares can march beyond $60 in 1H12. We think Qualcomm is a solid play on future growth in 3G handset and smartphone adoption, FBR Capital Markets analyst Craig Berger wrote in a note to clients.
Berger said key near-term opportunities include selling into the Apple iPhone and iPad (some or all of the devices), ramping with Nokia in North America, ramping more Snapdragon chips into Android-based smartphones and tablets and collecting royalties on a growing number of devices.
Also, Qualcomm remains the cellular technology leader, reliably generates meaningful cash flow, has returned 7 percent of its market capitalization in dividends and share repurchases in the past year and trades at a still-attractive 14x P/E (2012 pro-forma including stock compensation expense).
Other longer-term growth drivers include Windows on ARM notebook shipments, ramping Gobi datacard shipments into PCs and automobiles and other developing opportunities such as Mirasol display, Brew and Firethorn.
Berger, who has an outperform rating on Qualcomm stock, noted that Windows on ARM may be a real opportunity for Qualcomm, as notebook and tablet volumes ramp toward 600 million units by 2015. Even a 15 percent share of notebook shipments could drive a 50 million to 60 million unit opportunity (at high average selling prices).
Separately, Atheros networking and connectivity opportunities abound as Qualcomm demonstrates its commitment to being a merchant silicon supplier, a key strategic change since the firm acquired Atheros last May.
Shares of Qualcomm closed Friday's regular trading session at $56.16 on Nasdaq, while Berger has a price target of $75.