In a research report published Thursday, FBR analyst Christopher Rolland maintained an Outperform rating on Qualcomm (NASDAQ:QCOM) and slightly reduced the price target to $77 (from $83), as the company reported better-than-expected results and guidance but offered a significantly reduced revenue and EPS outlook for the year.
Rolland observed, “The company now fights against (1) three government antitrust suits (China, EU, U.S.), (2) royalty under-payers in China, (3) increasing price competition in China, (4) Apple share gains, and (5) Samsung displacement. Indeed, it has been a difficult year for QUALCOMM. Ironically, this latest blow—the setback for the chipset business— comes during a quarter in which it resolved its royalty dispute with a large Chinese licensee (we believe Huawei).”
The analyst continued, “Stepping back (a hard thing to do right now), we think QUALCOMM remains the gold standard in cellular technology. While we acknowledge that the company may lose share to competitors (including MediaTek, Marvell, and even Intel), we believe this lost share will be more than offset by ramping emerging-market opportunities. Currently, the stock has a P/E below the semiconductor market average, presenting a high-quality value opportunity, in our view.”
QUALCOMM Incorporated designs, develops, manufactures, and markets digital communications products and services in China, South Korea, Taiwan, and the United States.