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The 5G revolution could increase these 3 stocks
We now have a full month of 2021 behind us, and a few trends are emerging. The coronavirus crisis may still be with us, but as vaccination programs expand, the end is in sight. With President Trump out of place and Democrats holding both Houses of Congress and the White House, politics seems more predictable. And both of these developments bode well for an economic recovery this year. Looking back, to the year that has been, we can also see some trends that have remained firm despite the pandemic, the closures and the supercharged election season. One of the most important is the ongoing deployment of 5G network technology. These new networks bring with them a more complete realization of the promises inherent in the digital world. Faster connections, lower latency, higher online capacity, clearer signals – all of these will greatly improve the capabilities of the networked world. And it’s not just the mundane things like telecommuting or remote offices that will benefit – 5G will allow the Internet of Things and autonomous vehicles to further develop their potential. There is even talk of medical applications, of distant doctors practicing surgery using numerically controlled microsurgical tools. And these are just the possibilities that we can see from now on. Who knows what the future will really bring? To this end, we pulled the TipRanks database to find out more about three exciting games in the 5G space. According to The Street, we’ll likely see other interesting developments over the next few years as this technology takes over. Skyworks Solutions (SWKS) The first 5G name we’re looking at, Skyworks, is a semiconductor chip maker that generated $ 3.4 billion in total revenue for fiscal 2020. Skyworks, which is one of the major chip vendors for Apple’s iPhone series, saw a massive 68% increase in fiscal first quarter revenue21 – the top line hit $ 1.51 billion, a company record, and also much higher than what analysts had expected. Much of Skyworks’ sales success for the first quarter came after Apple launched the 5G-capable iPhone 12 line. Strong sales in the popular handset meant profits trickled down the supply chain – and Skyworks is shifting a disproportionate share of its business to Apple. In fact, Apple orders represented 70% of Skyworks revenue in the last quarter. However, the iPhone was not the only 5G handset to receive chips from Skyworks – the company is also a major supplier to Korean Samsung and Chinese Xiaomi, and has seen demand increase as these companies are also launching 5G compatible smartphones. . Finally, Skyworks supplies semiconductor chip components to the wireless infrastructure industry, in particular to “small cell” transmission units that are important in the wireless signal propagation network. As wireless service providers move to 5G transmission, Skyworks has seen orders for its products increase. In his Skyworks for Benchmark note, 5-star analyst Ruben Roy writes: “SWKS significantly exceeded consensus estimates and provided guidance for the March quarter that is also well above consensus estimates as mobile revenue related to 5G and broad segment revenues continued to accelerate … In addition to the continued strength of winning design momentum and customer activity, we are encouraged by SWKS ‘confident tone in relation to the global demand environment and the opportunities for content enhancement. According to his comments, Roy is pricing SWKS a buy with a target price of $ 215. At current levels, this implies a 20% increase for the coming year. (To look at Roy’s track record, click here) Roy is broadly in line with the rest of Wall Street, which has awarded SWKS 13 buy notes and 7 taken in the past three months – and sees the stock grow from about 15% over the next. 12 months, at a target price of $ 205.69 (see SWKS market analysis on TipRanks) Qorvo, Inc. (QRVO) Qorvo’s main products are chipsets used in the construction of radio frequency transmission systems that power wifi and broadband communication networks. The connection of this niche to 5G is clear – as network providers upgrade their RF hardware to 5G, they also upgrade the semiconductor chips that control the systems. This chipmaker has a solid niche, but it’s not resting on its laurels. Qorvo is actively developing a range of new products specifically for 5G systems and deployment. This 5G radio frequency product portfolio includes phase shifters, switches and integrated modules, and contains both infrastructure and mobile products. Qorvo reported total revenue of $ 3.24 billion for fiscal 2020. That revenue represents a 4.8% year-over-year increase – and the company’s sales accelerated in fiscal 2021. The latest quarterly report, for the second fiscal quarter, showed $ 1.06 billion in revenue, up 31% year-on-year. Rajvindra Gill, 5-star analyst at Needham, is optimistic about Qorvo’s outlook, noting: “Qorvo has seen strong sales and gross margins as 5G momentum enters CY21 with atypical seasonality … plans to manufacture 5G 500M handsets in 2021, with an additional $ 5-7 of content / unit from 4G to 5G. Management believes that adoption of ultra-broadband will be a key growth driver for smartphones going forward … “To that end, Gill sets a price target of $ 220 on QRVO stocks, suggesting a 31% improvement margin in 2021. As a result, he assesses the (To see Gill’s history, click here) What other analysts say? 13 buys and 6 takes represent a moderate buy analyst consensus. given the average price target of $ 192.28, stocks could climb about 15% (See QRVO stock market analysis on TipRanks) Telefonakiebolaget LM Ericsson (ERIC) From chipsets, we’ll move on to handsets. Ericsson, the Swedish telecommunications giant has long been a leader in mobile technology, and is well known for its infrastructure and software that make IP networking, broadband, cable TV and other telecommunications services possible. Ericsson is the biggest tee company European telecommunications and the largest provider of 2G / 3G / 4G infrastructure outside of China. But all of this is in the background. Ericsson is also a leader in the rollout of growing 5G networks in Europe. Ericsson is involved in the deployment of 5G in 17 countries in Europe, the Americas and Asia, and its product line includes infrastructure base units and handsets, giving the company an interest in all aspects of the new 5G networks. Ericsson’s revenue performance in 2020 was not particularly disrupted by the corona crisis. Yes, revenue fell in the first quarter, but that was in line with the company’s historical trend to increase revenue from the first to the fourth quarter. While the company’s revenue in 1H20 declined slightly year-over-year, earnings in 2H20 were higher. In the third quarter, revenue of $ 6.48 billion was up 8.7% year-on-year, and fourth-quarter revenue of $ 8.08 billion was up 17% compared to the previous year. Shares of the company also performed well in the “ corona year ”, showing a 64% 12-month gain. Raymond James’ 5-star analyst Simon Leopold bluntly attributes Ericsson’s recent gains to its participation in 5G deployments. “The expected deployment of 5G in Japan has started. Share gains continue as Ericsson capitalizes on the challenges facing its biggest competitors and more carriers embrace 5G … it seems clear that Ericsson should gain market share … Competitor Nokia has avoided Chinese 5G plans, citing challenges to profitability, but Ericsson appears to be profiting from it. the difficult region. Leopold rates this stock as an outperformance (i.e. a buy), and its price target of $ 15 implies upside potential of around 14% for the coming year. (To see Leopold’s track record, click here) Raymond James’ analyst, although bullish on ERIC, is actually less so than the Wall Street consensus. The stock has a Strong Buy consensus rating, based on 5 unanimous reviews, and the average price target of $ 16.50 indicates potential for growth of 25% from the stock price of $ 13.19 . (See ERIC Stock Market Analysis on TipRanks) For great ideas for 5G stocks traded at attractive valuations, visit TipRanks Best Stocks to Buy, a newly launched tool that brings together all the information about TipRanks stocks. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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