Technology
4 Chip Stocks That Are Big Winners With New Samsung Galaxy S6
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With the Apple iPhone 6 absolutely crushing sales records around the globe, one company is making sure that it does the very best to hold serve in the increasingly tough smartphone wars. Samsung recently held its “Unpacked” Mobile World Congress event, where the company unveiled the highly anticipated Galaxy S6 smartphone. A new report from the analysts at J.P. Morgan says that the initial views coming in from the carriers and the technology media have been very positive and constructive.
With Samsung obviously wanting to claw back some of the market share being lost to Apple, the J.P. Morgan team points out in the new report that there will be some very big winners in the semiconductor world as Samsung aficionados migrate to the new smartphone. Four stocks rated Overweight at the firm should see a direct benefit from the new Galaxy S6.
Broadcom Corp. (NASDAQ: BRCM) is a top supplier to both Samsung and Apple, and the new S6 could bring even more earnings growth for the chip giant. Broadcom supplies touch-screen controller chips for the iPhone 6. The S6 will be using the company’s second generation 2X2 5G Wi-Fi/Bluetooth combo, and the new GPS/Sensor hub chipset. The analysts feel that because Samsung is going to use its own applications processor, the company is poised to gain share versus last year, so overall a huge win for the tech giant.
Broadcom shareholders are paid a 1.2% dividend. The J.P. Morgan price target is $55, and the Thomson/First Call consensus price target is $47.61. The stock closed on Tuesday at $45.43 a share.
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Maxim Integrated Products Inc. (NASDAQ: MXIM) primarily serves automotive, communications and data center, computing, consumer and industrial markets, but the J.P. Morgan team sees the company continuing to supply Samsung with power management health/environmental monitoring/sensing solution and audio amplifiers. Although the dollar amount is likely to be flat versus the Galaxy S5, it continues a strong revenue stream for the company. Maxim also is expected to be providing the chip that handles power management in the Apple Watch, which is expected to be announced next week.
Maxim investors are paid a very generous 3.3% dividend. The J.P. Morgan price target is $40, and the consensus target is set at $35.17. Shares closed Tuesday at $35.09
Texas Instruments Inc. (NASDAQ: TXN) is an old-school name that also comes in looking good on the J.P. Morgan S6 scorecard. The analysts point out that a new feature on the S6 is the addition of wireless charging capability, which could be huge. The analysts also think that the company has won the charging chipset solution that goes on the receive side of the phone, while another company has won the transmit side. They also point out that the wireless charging solution is a good example of the company’s overall broad product portfolio.
Texas Instruments investors paid a very respectable 2.3% dividend. The J.P. Morgan price target is $65, and the consensus target is $57.41. Shares closed above that figure at $58.57 Tuesday.
Audience Inc. (NASDAQ: ADNC) is a small cap company that the J.P. Morgan team feels comes out a winner as well. They report that Audience continues to dominate the voice/audio processing with its latest generation eS804 voice processor in the S6 to support always-on and hands-free voice recognition. This is huge in a world where holding a smartphone while driving is ever more frowned upon. The analysts also think the company will provide the voice processor for the Galaxy Note 5, which is expected to launch in the second half of this year.
The J.P. Morgan price target is a staggering $10, and the consensus is much lower at $5.25. The stock closed trading on Tuesday at $5.16 a share.
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Clearly Samsung has its hands full dealing with a surge from Apple. That said, there are many loyal Android users that should be buyers of the new phone and future products. Plus, some of these top stocks to buy are doing business with both of the companies, and that is a huge plus.
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