Market Overview

Morgan Stanley Upgrades Qualcomm On Earnings Multiple Expansion Opportunity

Morgan Stanley Upgrades Qualcomm On Earnings Multiple Expansion Opportunity

QUALCOMM, Inc. (NASDAQ: QCOM) is up nearly 50 percent in the last five trading sessions since announcing a settlement with Apple, Inc. (NASDAQ: AAPL). One Wall Street analyst said now is not the time to be cashing out of Qualcomm.

The Analyst

Morgan Stanley analyst James Faucette upgraded Qualcomm from Equal-Weight to Overweight and raised his price target from $55 to $95.

The Thesis

Despite the bullish knee-jerk reaction by the market, Faucette said Qualcomm shares still trade at a valuation discount to its semiconductor peer group. Over time, he said investors can expect the stocks multiple to expand to close that valuation gap, driving the share price even higher.

“We see new opportunities and optionality as more attractive than risks potentially overlooked by any near-term settlement-induced euphoria,” Faucette wrote in a note.

Faucette said Qualcomm’s opportunities in the 5G market aren’t priced into the stock at this point, making it akin to a cheap option for investors.

In the meantime, Faucette said payments from Apple will dramatically improve Qualcomm’s balance sheet. He said Qualcomm may even be able to completely eliminate its roughly $5 per share in net debt.

Given the nature of Qualcomm’s business, Faucette said investors will always have to deal with a certain degree of headline risk. However, he said the Apple news reinforces the idea that product performance and intellectual property value will always matter in the market.

Price Action

Qualcomm's stock traded higher by 5.2 percent to $86.30 per share following the upgrade and is now up 49 percent year-to-date.

Related Links:

'A Headline Negative': Intel Analysts React To Chipmaker's Exit From 5G Modems

'Significant Win': Wall Street Weighs In On Qualcomm-Apple Deal

Photo courtesy of Qualcomm.

Latest Ratings for QCOM

Aug 2019DowngradesHoldSell
Aug 2019MaintainsBuy
Aug 2019MaintainsBuy

View More Analyst Ratings for QCOM
View the Latest Analyst Ratings

Posted-In: 5G James Faucette Morgan StanleyAnalyst Color Upgrades Price Target Top Stories Analyst Ratings Best of Benzinga


Related Articles (AAPL + QCOM)

View Comments and Join the Discussion!

Latest Ratings

ADBECleveland ResearchInitiates Coverage On283.0
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

GBP/USD: Losing Support, Just Like PM May

Microcap Biotech Akari Rallies On Coversin Trial Results