Bank Of America Turns Incrementally Bullish On Qualcomm, Highlights Multiple Catalysts

QUALCOMM, Inc. QCOM's outlook as a standalone company remains favorable ahead of four potential catalysts that can help support the stock's appreciation, according to Bank of America.

The Analyst

Bank of America's Tal Liani maintains a Buy rating on Qualcomm's stock with an unchanged $75 price target. The analyst added Qualcomm to the firm's "US 1 list," which consists of "a collection of our best investment ideas that are drawn from the universe of Buy-rated US-listed stocks."

The Thesis

An incrementally positive view of Qualcomm's stock is based on four potential catalysts, Liani said in a note.

The company's pending merger with NXP Semiconductors NV NXPI will be EPS accretive;
Ongoing licensing negotiations with Huawei and Apple Inc. AAPL; if successful on both negotiating fronts and the NXP deal closes, Qualcomm's 2019 EPS could rise to $6.85 versus current consensus EPS estimate of $3.80;
The departure of CEO Paul Jacobs could signal "deeper changes" including a shift in licensing, restructuring, and M&A strategies; and
Steeper cost cutting restructuring.

The catalysts are accompanied with a certain degree of risk, especially negotiations with Apple, but also represent a "particularly attractive buying opportunity," Liani said.