Evercore ISI on Qualcomm : 'New Apple Supply Agreement a Clear Positive For EPS Trajectory Into Next Mobile Upturn'

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Evercore ISI on Qualcomm : 'New Apple Supply Agreement a Clear Positive For EPS Trajectory Into Next Mobile Upturn'

Evercore ISI analyst reiterated an In Line rating and $140.00 price target on Qualcomm (NASDAQ: QCOM ).

The analyst comments "QCOM this morning announced that it has entered into an agreement with Apple (NASDAQ: AAPL ) to supply Snapdragon 5G Modem‑RF Systems for smartphone launches in 2024, 2025 and 2026. QCOM now assumes 20% share of chipset supply for the iPhone launch in 2H26. This is a clear change statement vs. management’s prior vision for “minimal” contribution from AAPL modem revenues in FY25 (beginning October 2024). Our Take: We had indeed anticipated that QCOM would remain the sole-source supplier of AAPL’s 5G modem in the iPhone 16 Series due in 2HCY24, given indications that AAPL’s in-house 5G modem development challenges were continuing. So, 5G Modem revenues are already in our model, which extends through CY24-end. That said, the multi-year continuation of this supply agreement into CY25 offers a much clearer runway to QCOM EPS reacceleration into the next cyclical upturn across Handsets and IoT, as we believe that QCOM’s iPhone modem business accounts for roughly ~$2-$3 in annualized EPS. We intend to offer additional thoughts on CY25 earnings power in the coming weeks, ahead of QCOM’s September Q earnings report, but for now, a clear incremental positive for QCOM shares."

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