Qualcomm (QCOM) Stock Is Set to Soar on Back of Apple Settlement, Says Analyst


As Apple’s (NASDAQ:AAPL) legal battle with Qualcomm (NASDAQ:QCOM) continues to drag on, the U.S. International Trade Commission recently recommended that a trade judge find Apple guilty of infringing upon at least one of Qualcomm’s patents. Qualcomm has requested an import ban on infringing iPhones, while hoping that such a ban – or even a threat of one – would push Apple to settle or drop its legal war against Qualcomm.

Indeed, Nomura analyst Romit Shah sees Qualcomm getting a significant boost from an Apple settlement and thus he’s raising his target price for QCOM from $70 to $80, while reiterating a Buy rating on the stock. (To watch Shah’s stock picks, click here)

Shah wrote, “What Apple stands to gain per iPhone ($10-15) versus what Apple stands to lose ($800-1200) per iPhone seems very unfavorable, particularly as Qualcomm gains momentum with courts in the U.S., Germany and China. The Apple versus Qualcomm dispute is a litigious mess – in each region, there are multiple cases filed in different courts (federal, regional, district) with multiple countersuits. The cases are about Apple’s unlicensed use of non-standard essential patents, which are broken out below. In the United States, Qualcomm currently has 16 patents that the company claims were infringed upon. An initial determination by the ITC is due on September 14th and indications from ITC staff attorneys are that Apple violated at least one patent (battery saving technology).”

The analyst continued, “We believe the growing prospects of a settlement with Apple, coupled with a large share buyback, has the potential to drive revenue and EPS from $22.0 billion and $3.61 in CY18 to $26.3 billion and $6.35 in CY19 and $27.4 billion and $7.58 in CY20. This level of growth is substantial, especially in the current environment whereby most semiconductor companies are seeing decelerating growth.As such, we remain positive on QCOM shares and are raising our target price from $70 to $80.”

The Street largely seems to echo Shah’s positive sentiment, considering TipRanks analytics showcase QCOM as a Buy. Out of 13 analysts polled in the last 3 months, 8 are bullish on Qualcomm stock, 4 remain sidelined, and only one is bearish on the stock. With a slight downside potential, the stock’s consensus target price stands at $68.55. (See QCOM’s price targets and analyst ratings on TipRanks.)

 

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