Qualcomm Still Worth $80/Share, Credit Suisse Says

In a report published Thursday, Credit Suisse analysts maintained an Outperform rating on Qualcomm, Inc. QCOM, with a price target of $80. Qualcomm reported its Q2FY15 results ahead of expectations, with revenues and EPS at $6.9bn and $1.41, respectively. Despite the beat, the results were overshadowed by weakness ahead in QCT. In the report Credit Suisse noted, "Qualcomm's explanation for the lower outlook in both Q3FY15 and FY15, was a combination of a worse mix shift and more share loss than previously anticipated. While the weakness at Samsung is widely understood, we believe the inability to anticipate this damages credibility." The analysts believe, however, that QCT could recover heading into FY16. "LT, we still believe that QCT can continue to gain market share in the wireless chip market, driven by the mix shift to LTE." "…We see a recovery at Samsung, significant buyback, and licensing uptick at QTL all as potential positive driver to a growth…Our SOTP analysis shows that QTL is worth $44 (based upon a conservative DCF) and QCT is worth $24 on a multiple in-line with peers despite superior growth prospects and taxed net cash/sh of $12," the analysts added. The EPS estimates for FY15 and FY16 have been reduced from $5.05 to $4.79 and from $5.69 to $5.53, respectively.