Market Overview

Analyst Downgrades Qualcomm: 'Share Appreciation Hinges On Licensing Resolutions'

Share:
Analyst Downgrades Qualcomm: 'Share Appreciation Hinges On Licensing Resolutions'

QUALCOMM, Inc. (NASDAQ: QCOM) is facing multiple headwinds, according to an analyst at Bank of America Merrill Lynch.

The Analysts

Tal Liani downgraded Qualcomm from Buy to Neutral and reduced his price target from $75 to $70.

The Thesis

Qualcomm's management has used up most opportunities for P&L restructuring, Liani said in a note. Even after this, earnings upside alone can't lead to share price appreciation, and the company has to resolve its ongoing licensing disputes with Huawei and Apple Inc. (NASDAQ: AAPL), he added.

The catch here is the timing of the dispute redressal is uncertain.

Liani said Qualcomm could also be constrained by softening smartphone demand, and accordingly lowered his estimates.

The analyst thinks the company's FY19 EPS guidance of $5.25 doesn't seem achievable. Liani's revised EPS estimate of $4.21 is 6 percent below the consensus.

Additionally, BofA doesn't see 5G as a major driver in the foreseeable future, as meaningful device shipments could commence only in 12-18 months. That said, the firm sees near-term support emerging from the company's $16 billion accelerated share repurchase program.

"Share price support is a positive in the near term, but also a negative factor, as past experience indicates that associated stability can reverse after buyback programs end," Liani said.

Price Action

At time of writing, Qualcomm shares traded around $63.37.

Related Links:

No Qualcomm? No Problem: NXP Semiconductors Is Still A 'King'

Qualcomm's Risk-Reward Is Too Favorable to Ignore, Cowen Says In Upgrade

Photo courtesy of Qualcomm.

Latest Ratings for QCOM

DateFirmActionFromTo
Aug 2019DowngradesHoldSell
Aug 2019MaintainsBuy
Aug 2019MaintainsBuy

View More Analyst Ratings for QCOM
View the Latest Analyst Ratings

Posted-In: Bank of America Merrill Lynch Tal LianiAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (AAPL + QCOM)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
AIGEvercore ISI GroupInitiates Coverage On
AVYCitigroupMaintains132.0
TIFMorgan StanleyMaintains94.0
ALLYCitigroupMaintains38.0
SREMorgan StanleyMaintains152.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

An Ugly October Punishes A Slew Of Sector ETFs

3 Reasons To Buy GE, According to UBS