By Angela Palumbo
Qualcomm stock was rising after a Citi analyst upgraded his rating on the shares, saying he is confident about a recovery in the handset market.
Analyst Christopher Danely upgraded shares of Qualcomm to Buy from Neutral and raised his target for the stock price to $160 from $110. The stock was up 1.4% to $141.03 in premarket trading on Friday.
Danely wrote in a research note Friday that his industry checks “indicate inventory replenishment continues in the handset space which should benefit both revenue and margins at Qualcomm.”
Qualcomm is a major supplier to the smartphone market, so any weakening in demand for the devices is trouble for the maker of mobile processors and 5G wireless chips. It suffered in 2023 when smartphone demand took a hit.
The research firm International Data Corporation reported in December that the worldwide mobile phone shipments were expected to fall to 1.37 million units in 2023, down 4.4% from 1.44 million in 2022.
But things have been looking up for Qualcomm. On the company’s fourth-quarter earnings call in November, Chief Financial Officer Akash Palkhiwala said “we’re seeing early signs of stabilization in demand for global 3G/4G/5G handsets.”
“We believe the replenishment will continue at least through 1Q24 and Qualcomm should gain share at Samsung as well. We also expect Qualcomm’s margins to improve given improved sales trends,” Danely said in his research note.
More information on how a recovery in the market for cellphones would affect Qualcomm is expected when the company reports its first-quarter earnings on Jan. 31.
Write to Angela Palumbo at angela.palumbo@dowjones.com