The analyst affirms that QCOM’s licensing agreement with OPPO is a meaningful step forward to QCOM gaining full royalty compliance in China. The analyst explains, “As management alluded to in the June earnings call, signing outstanding license agreements would raise Qualcomm’s royalty capture to over 75% of global sales from Chinese OEMs. Estimating OPPO to be between 15% – 20% of Chinese OEM device sales v. Vivo at 10-15%, we think this deal closes a significant portion of the remaining gap towards achieving full royalty compliance.”
Based on the analyst’s estimates, he thinks that royalties from OPPO’s device business makes up approximately $0.16 in EPS. The analyst concedes that the size of the remaining catchup payment to QCOM is less clear. Despite these murky waters the analyst provides, “But we also note the near-term momentum currently behind OPPO sales, which is expected to continue taking share from smaller Chinese OEMs, and combined with catch up payments and the possibility of signing Vivo sooner than later, could drive upside to our QTL estimates.”
James Faucette is ranked #340 of 4,083 analysts on TipRanks. He maintains a 75% success rate and average return of 9.5%. When rating QCOMM, the analyst maintains an 88% success rate and an average profit of 11.3%.
TipRanks shows 53% of analysts issuing a Buy rating for QCOM, 42% maintaining a Hold rating, and 5% upholding a Sell rating for the stock. The consensus price target for QCOM is $62.31, marking a 2.82% upside from current prices.