Watch Out: Challenges Ahead for QUALCOMM (QCOM) Stock, Top Analyst Dials Down Price Target

Warning of burdensome tech transfer restrictions and trade wars, Vijay Rakesh scales back his high expectations on QCOM.


Top analyst Vijay Rakesh at Mizuho is getting a little less confident on QUALCOMM, Inc. (NASDAQ:QCOM) amid a brewing trade war with China and prospective big domestic technology transfer restrictions circling ahead.

As such, the analyst reiterates a Buy rating on QCOM stock while cutting the price target from $75 to $64. All the same, this still implies a solid 16% upside from current levels.

Meanwhile, the chip giant could refile NXPI approval to satisfy MOFCOM- which may stall the process. That together with the domestic ban on equipment sales to ZTE announced on Monday, a ban that lasts seven years, may lead to even more delays. “Given the delays, significant antitrust and 5G technology transfer restrictions, potential NXPI divestitures, market share challenges with smartphones and MOFCOM pushbacks,” the analyst sees fit to brace for QCOM to bear the brunt of these headwinds ahead.

Overall, “We believe the QCOM-NXPI M&A environment continues to evolve as the U.S. pushes restrictions on 5G technology transfer and limits on ZTE networking equipment sales. Huawei and ZTE combined are ~26% of the global communications service provider market. In our coverage space, we believe NXPI with RF base station sales exposure should be limited with the China divestiture. QCOM has ZTE exposure through its 3% handset share and base stations and licenses. We believe AVGO exposure is limited. […] While China has little to gain from the QCOM-NXPI merger, it needs QCOM’s help in 5G though there might be significant U.S. tech transfer restrictions,” asserts Rakesh.

Vijay Rakesh has a very good TipRanks score with a 77% success rate and a high ranking of #12 out of 4,788 analysts. In his annual returns, Rakesh garners 31.3%. Investors who follow the analyst’s recommendation on QCOM will earn an average of 1.9% in profits on the stock.

TipRanks exhibits the chip giant has Wall Street almost evenly split between the bulls and those choosing to play it safe. Based on 15 analysts polled in the last 3 months, 7 rate a Buy on QCOM stock, 7 maintain a Hold, while 1 issues a Sell. Notably, the 12-month average price target stands at $68.00, marking a nearly 23% in return potential for the stock. In other words, even the analysts that are hedging their bets have some healthy optimism reflected in expectations.

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