Analyst Explains Why They Downgraded Their Rating on Qualcomm Inc (QCOM)

By Ryan Adsit

In a report released today, Vijay Rakesh from Mizuho Securities downgraded Qualcomm Inc (QCOMResearch Report) to Hold, with a price target of $65. The company’s shares closed yesterday at $69.31.

Rakesh observed:

“We are moving to the sidelines given the uncertainty with Judge Koh’s FTC ruling on QCOM. We believe a potential change in the license model to royalty as a % of “chip” ASP at ~$50 versus “handset” ASP at ~$300 could be a SIGNIFICANT 50+% downside to EPS. The limited clarity as the case goes to appeals to the Ninth District and potentially the Supreme Court, and uncertainty if recent license agreements with China NDRC can still be upheld, inserts a significant overhang on QCOM. and adjusting PT to ~$65 until we get clarity. QCOM has handily outperformed the SOX by 540 bps YTD even with the pullback.”

According to TipRanks.com, Rakesh is a top 100 analyst with an average return of 19.5% and a 57.1% success rate. Rakesh covers the Consumer Goods sector, focusing on stocks such as Skyworks Solutions, Texas Instruments, and Cypress Semicon.

Qualcomm Inc has an analyst consensus of Moderate Buy, with a price target consensus of $92.88.

See today’s analyst top recommended stocks >>

Qualcomm Inc’s market cap is currently $84.14B and has a P/E ratio of 36.67. The company has a Price to Book ratio of 21.76.

Based on the recent corporate insider activity of 91 insiders, corporate insider sentiment is negative on the stock.

TipRanks has tracked 36,000 company insiders and found that a few of them are better than others when it comes to timing their transactions. See which 3 stocks are most likely to make moves following their insider activities.

QUALCOMM, Inc. engages in the development, design, and provision of digital telecommunications products and services. It operates through the following segments: Qualcomm CDMA Technologies (QCT), Qualcomm Technology Licensing (QTL), and Qualcomm Strategic Initiatives (QSI).