Market Overview

Bank Of America Upgrades Qualcomm, Highlights Improved Visibility

Share:
Bank Of America Upgrades Qualcomm, Highlights Improved Visibility

Qualcomm, Inc. (NASDAQ: QCOM) reported Wednesday fiscal second-quarter results, which was in-line with expectations but the resolution of a long-lasting dispute with Apple Inc. (NASDAQ: AAPL) creates improved visibility, according to Bank of America.

The Analyst

Bank of America's Tal Liani upgraded Qualcomm from Neutral to Buy with a price target lifted from $90 to $105.

The Thesis

Qualcomm's in-line quarter was coupled with three areas of weakness, Liani said in the note.

  1. Revenue guidance fell short of expectations despite the disclosure of $4.5 billion in royalties from Apple.
  2. Third-quarter mobile station modem (MSM) shipments of 160 million units were short of expectations of 181 million and likely due to Huawei gaining market share and overall soft demand.
  3. Operating expenditure is modeled to grow 6-8 percent quarter-over-quarter versus expectations of a 7-percent decline.

Despite a concerning outlook, the bullish case for Qualcomm's stock can be made as the fiscal third quarter could prove to be a trough ahead of the 5G buildout cycle, the analyst wrote. The company has notable exposure as the company cited more than 75 design wins which is up from 30 last quarter.

5G gives Qualcomm an opportunity to drive more content per device. Liani said Intel Corporation (NASDAQ: INTC)'s decision to exit the modem market gives Qualcomm better pricing power, the analyst wrote.

Price Action

Qualcomm traded marginally higher Thursday at $86.6 per share.

Related Links:

Morgan Stanley Upgrades Qualcomm On Earnings Multiple Expansion Opportunity

Qualcomm Analyst Weighs Pros And Cons Of Apple Deal

Latest Ratings for QCOM

DateFirmActionFromTo
Nov 2019ReiteratesBuy
Nov 2019MaintainsHold
Nov 2019UpgradesNeutralBuy

View More Analyst Ratings for QCOM
View the Latest Analyst Ratings

Posted-In: Analyst Color Earnings News Guidance Upgrades Price Target Top Stories Analyst Ratings Best of Benzinga

 

Related Articles (AAPL + INTC)

View Comments and Join the Discussion!
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.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
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

Q1 Earnings Preview For First Solar

Wedbush Initiates Uber At Outperform, Calls It The 'Amazon Of Transportation'