Skip to main content

Market Overview

What China's iPhone Ruling Means For Qualcomm And Apple

Share:
What China's iPhone Ruling Means For Qualcomm And Apple

Qualcomm, Inc. (NASDAQ: QCOM)'s ongoing dispute with Apple Inc. (NASDAQ: AAPL) expanded Monday after a Chinese court sided with Qualcomm and banned the import of many iPhone models in the country.

Here is a summary of how some of the Street's top analysts reacted to the report and the potential impact to Qualcomm's business.

The Analysts

  • Bank of America's Tal Liani maintains a Neutral rating on Qualcomm with an unchanged $67 price target.
  • Canaccord Genuity's T. Michael Walkley maintains at Buy, unchanged $75 price target.
  • Wedbush's Daniel Ives maintains an Outperform rating on Apple with an unchanged $275 price target.
  • Tigress Financial Partners' Ivan Feinseth talks Qualcomm in his daily newsletter.

Why This Is Happening In China

Qualcomm and Apple are both U.S.-based companies which begs the question: why is their dispute playing out in China? Eileen Li, head of China-based market intelligence firm Red Pulse was quoted by CNBC as saying it's both easier and cheaper for one American company to bring a case against another in China.

China is "tightening a lot of its policy and becoming more serious about IP protection," she said.

Bank Of America: Positive Step

Qualcomm's victory and Apple's ban on importing multiple iPhone devices for sale in China could generate additional pressure for Apple to put an end to the ongoing licensing dispute, Liani said in a note. A favorable resolution between the companies could result in an incremental 92 cents to $1.18 per share in fiscal 2019 EPS for Qualcomm.

Canaccord: Strength Of Qualcomm

Qualcomm's win demonstrates the strength of the company's patent portfolio ahead of 20 other patent cases moving forward, Walkley said. Working in Qualcomm's favor, the court's decision doesn't include the latest iPhone XS, XS Max and XR models but the ruling sets a precedent that could eventually extend to the new lines.

Wedbush: Nothing More Than Concerning Headlines

Qualcomm's court ruling win over Apple is merely "noise" as the iPhone models banned for sale relate to just 10 to 15 percent of total sales in the region, Ives said. Nevertheless, the report will be seen as another worry Apple investors will have to deal with for the near term.

Over the medium term, Apple's outlook of $15 in EPS in fiscal 2020 remains "rock solid" and backed by the 350 million iPhone devices that are likely due for an upgrade over the next 12 to 18 months, of which 60 to 70 million are located in China.

Tigress Financial: End Of Battle Mutually Beneficial

The latest ruling in China could bring both companies back to the negotiating table, Feinseth said in his daily newsletter. A mutually beneficial solution would allow the two companies to work together on a future 5G iPhone, which would imply "significant upside" potential for Qualcomm.

Price Action

Shares of Qualcomm were trading higher by nearly 1 percent Tuesday, while Apple's stock was marginally lower.

Related Links:

Qualcomm Granted Injunction Against Apple, Chinese Court Rules

Cramer Talks Apple's Monday Rebound, Says Jumpy Investors 'Will Take Their Cue From Anything'

Latest Ratings for AAPL

DateFirmActionFromTo
Feb 2021RBC CapitalAssumesOutperform
Jan 2021DA DavidsonMaintainsBuy
Jan 2021Deutsche BankMaintainsBuy

View More Analyst Ratings for AAPL
View the Latest Analyst Ratings

 

Related Articles (AAPL + QCOM)

View Comments and Join the Discussion!

Posted-In: Bank of America Canaccord Genuity ChinaAnalyst Color Legal Top Stories Analyst Ratings Tech Best of Benzinga

Latest Ratings

StockFirmActionPT
NIUDaiwa CapitalInitiates Coverage On41.5
QMCONorthland Capital MarketsInitiates Coverage On12.0
IBKRJefferiesInitiates Coverage On89.0
MRETFTD SecuritiesDowngrades18.5
SWKSGoldman SachsDowngrades135.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
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.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
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