Qualcomm (QCOM): MOFCOM Approval Around the Corner? This Top Analyst Believes Chances Are Getting Better

Will MOFCOM (Ministry of Commerce) finally approve Qualcomm’s (NASDAQ:QCOM) planned takeover of NXP Semiconductors (NASDAQ:NXPI)? RBC Capital’s top analyst Amit Daryanani believes the probability for QCOM/NXPI deal to get MOFCOM approval has improved over last few weeks given.

Why? “1) MOFCOM just approved Toshiba’s $18B memory sale to Bain led consortium last night, 2) MCHP/MSCC transaction cleared MOFCOM earlier this week and 3) President Trump announced he and President Xi (of China) are working to get ZTE “back into business fast” few days ago. We think this logically opens the door for QCOM/NXPI transaction that has been held up by MOFCOM for 15+ months. NXPI deal getting approved would unlock sizable $1.50+ synergies for QCOM.”

That said, the analyst believes that even without the NXPI deal, QCOM is an attractive large cap value name:

“We think QCOM is an attractive name for value investors as a) either NXPI deal gets done or QCOM does a sizable buyback and b) we see high probability that OEMs under dispute could settle sooner now that it’s clear QCOM isn’t going anywhere. Finally, should we get more discipline and consistent execution, the stock should see a sustained multiple expansion.”

As such, Daryanani reiterates an Outperform rating on Qualcomm shares, with a price target of $70, which represents a potential upside of 23% from where the stock is currently trading.

Investors who listened to Daryanani over the past year have made 28% on their Koffler bets, according to TipRanks. Daryanani holds a 85% success rate and is ranked #13 out of 4801 analysts.

Ultimately, Wall Street is just not completely sure yet about this chip giant. Out of 13 analysts polled in the last 3 months, 6 rate a Buy on QCOM, 6 maintain a Hold, while only one issues a Sell. The 12-month average price target notably stands at $62.40, marking a potential upside of 9% from current levels.


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