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Analyst: Why Apple's Potential Purchase Of Intel's Modem Businesses Could Be Positive For Sequans

Analyst: Why Apple's Potential Purchase Of Intel's Modem Businesses Could Be Positive For Sequans

Reports of Apple Inc. (NASDAQ: AAPL) looking to acquire Intel Corporation's (NASDAQ: INTC) smartphone modem business are "plausible" and would bode well for Sequans Communications SA (NYSE: SQNS), according to Roth Capital.

The Analyst

Roth's Scott Searle maintains a Buy rating on Sequans with a 12-month $2.50 price target.

The Thesis

If Apple acquires Intel's assets, Searle said it would imply Sequans, a provider of single-mode LTE wireless semiconductor solutions, is among the shrinking population of non-Chinese and non-vertically integrated 4G and 5G silicon suppliers. Apple's tie-up with Intel's asset could create a scenario where all non-Apple and Intel baseband customers will be "fair game" for merchant suppliers like Sequans to target.

Related Link: Is the 5G Boom Starting? A Huge Options Trade Thinks So

Searle said Sequans is backed by a $9.8 million 5G investment from a strategic partner and is likely to add new strategic relationships in the near term. This implies the company's core value is "not recognized" by the Street.

Shares of Sequans are trading at less than two times EV/2020 sales, which is a discount to its small-cap semi peers at around three times. However, Searle said this isn't justified given expectations for sales growth of at least 40% and at 3.5 times EV/2020 sales the stock would be valued at around $2.50.

Price Action

Thinly-traded Sequans sat around 92 cents per share Turesday afternoon.

Latest Ratings for SQNS

Oct 2018MaintainsBuyBuy
Feb 2018MaintainsBuyBuy
Jan 2018Initiates Coverage OnBuy

View More Analyst Ratings for SQNS
View the Latest Analyst Ratings

Posted-In: 5G 5G Modems ROTH Capital PartnersAnalyst Color Penny Stocks Markets Analyst Ratings Tech Best of Benzinga


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