Shares of QUALCOMM, Inc. (NASDAQ:QCOM) and Ericsson (ADR) (NASDAQ:ERIC) are outperforming the broader market after RBC Capital said the stocks were good investments for the near-term. Qualcomm sells chips used in smartphones, while Ericsson is a provider of communications equipment.
Qualcomm’s royalty business remains healthy and defensible, RBC Capital analyst Mark Sue wrote in a note to investors earlier today. Additionally, QUALCOMM, Inc. (NASDAQ:QCOM) should benefit from the expansion of LTE networks and it returns 75% of its free cash flow to shareholders, Sue stated. The analyst was also upbeat on Ericsson, as he expects the company’s revenue to steadily grow by about 2%-5%. Like Qualcomm, Ericsson (ADR) (NASDAQ:ERIC) should benefit from the expansion of LTE networks, as the company has a 40% share of the global LTE market, Sue stated.
The company can benefit from upgrades in Europe and new contracts in Japan and the analyst also thinks Ericsson could raise its dividend. Sue kept Outperform ratings on both QUALCOMM, Inc. (NASDAQ:QCOM) and Ericsson.
On March 30, Barron’s identified Ericsson as one of several companies that could benefit from increases in the value of their products and possibly become takeover targets for Google (NASDAQ:GOOG) or other companies. Other technology vendors that are in this category include Alcatel Lucent (ALU), Nokia (NOK), and Ciena (CIEN).
In early trading, Qualcomm climbed 13c to $78.20 and Ericsson shares were down 4c to $13.17, while the Nasdaq index was down nearly 1%. :theflyon
Analysts have a consensus price target of $78.92 on QUALCOMM, Inc. (NASDAQ:QCOM) which indicates a .50% upside. The consensus rating of the stock is a BUY with a score of 2.72. There are currently 9 Hold Ratings and 23 Buy ratings on the stock.
A recent analyst action consisted of Canaccord Genuity boosting its price target from $86 to $90 on April 3rd.
Suggested Reading: What to Know About Japan