Qualcomm (QCOM) has removed most of the uncertainty surrounding its business. However, the uncertainty about Apple (AAPL) remains. Analysts are divided between a “buy” and a “hold.” For Qualcomm, 12 out of 24 analysts monitoring the stock having a “buy” recommendation, while 11 analysts have a “hold” recommendation.
Analysts have a median target price of $70 and a bearish target of $55 for Qualcomm. Currently, the stock is trading near its bearish target. Investors reacted negatively to the company’s fourth-quarter earnings.
Bank of America Merrill Lynch
According to a (QCOM)+to+Neutral/14763280.html">Street Insider article on October 31, Bank of America Merrill Lynch analyst Tal Liani reduced his target price for Qualcomm from $75 to $70, which represents an upside of 30% from the current trading price. He thinks that Qualcomm needs to settle licensing disputes with Huawei and Apple.
Any earnings upside wouldn’t be significant as the smartphone demand softens. Also, 5G isn’t expected to drive significant growth for the next 12–18 months. Amid these headwinds, Tal Liani doesn’t expect Qualcomm to achieve its fiscal 2019 EPS target of $5.25. He expects Qualcomm to report an EPS of $4.21 in fiscal 2019.
Qualcomm’s management might support the stock price with its $16 billion ASR (accelerated share repurchase), which is part of the $30 billion buyback program. However, the support will likely fade. The stock is expected to decline after the program ends.
Tal Liani reiterated Canaccord Genuity analyst T. Michael Walkley’s comments. According to another (QCOM)+PT+Raised+to+$88+at+Canaccord+Genuity/14541475.html">Street Insider article dated August 23, Michael Walkley stated that Qualcomm stock could rise to $75 if it settles with Apple—even for a 50% royalty fee, which equates to $5 per unit—and Huawei.
However, the licensing settlement with Apple might only bring one-off gains to Qualcomm. Media reports state that Apple might switch to Intel (INTC) even for 5G.