In fact, the analyst noted that the high end of Qualcomm's fiscal third-quarter guidance implies it receives payment in full, the low-end of the guidance "doesn't account for the possibility of no payment."
Qualcomm Needs Better Diversification
Aside from Qualcomm's legal uncertainties, the analyst found other areas of concern for investors. Specifically, the company reported deliveries of 179 million MSM chips in the second quarter, which represent a 5 percent drop from a year ago after the company lost baseband share in the iPhone 7. While the company could see a lift in its June numbers from the Galaxy S8, further iPhone 8 share loss could present additional headwinds in the back-half of 2017.
Shafer also argued that Qualcomm's legal disputes reinforce the importance of diversification. While the acquisition of NXP Semiconductors does pose "above-average integration risk" the deal could be 30 percent-plus accretive in 2018.
However, this doesn't take away from Qualcomm's near-term legal headwinds, so the analyst is recommending investors remain on the sidelines.
Shares remain Perform rated with no assigned price target.
Related Links: Qualcomm's Apple Quarrel Likely To Remain Overhang Despite Strong Quarter Qualcomm Downgraded Amid iPhone 8 Share Loss© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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