In a note released Wednesday morning, Morgan Stanley analyst James Faucette initiated coverage on QUALCOMM QCOM with an Equal-weight rating, however, he has not yet set a price target.
The Good
Faucette views the transition of mobile carriers, such as China Mobile, 3G and 4G presents an opportunity for Qualcomm to continue to gain share in the global chipset market.
In addition to opportunities in the chipset market, Faucette says the company's intention to reduce its operating expenses at the exit of fiscal 2014 to levels below that of fiscal 2013.
The Bad
Faucette sees the fair value for Qualcomm's share in the $70-80 range and believes the market has been able to adequately reflect the companies opportunities.
Looking forward he wrote, "We believe that the 3% perpetual growth rate the market has implied post FY 2016 is reasonable, but potentially optimistic."
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