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Home / Business / Qualcomm stock sheds $ 100 as Huawei’s solution clears last hurdle for 5G licensing

Qualcomm stock sheds $ 100 as Huawei’s solution clears last hurdle for 5G licensing



Qualcomm Inc. stock price rose in the past to its previous high of $ 100 set two decades on Thursday after the chip maker revealed it had resolved a licensing dispute with the largest producer of the world’s smartphone, and clear the way as the new 5G standard comes out.

Qualcomm QCOM,
+ 15.06%
the shares set an intraday record price of $ 107.40 on Wednesday, reaching its previous high of $ 100.00 set on January 3, 2000, just before the dot-com crash. After that, the closest stock that came to $ 1

00 was $ 95.91 on January 17th. Shares were last up 15% at $ 106.84 in Thursday’s trading.

In addition to raising Wall Street earnings estimates for the quarter on Wednesday, Qualcomm announced a long-awaited patent licensing agreement with Huawei that had been going back a year ago when it recorded the results of agreement with Apple Inc. AAPL,
+ 0.98%

Of the 29 analysts covering Qualcomm, 18 have buy or overweight ratings, eight have hold ratings, and three have sell ratings. Of those, 18 raised their price targets resulting in an average price target of $ 113.24, up from the previous $ 98.48, according to FactSet data.

Late Wednesday, it was also revealed that China’s Huawei had overtaken Samsung Electronics Co. 005930 of South Korea,

as the world’s largest supplier of smartphones due to supply disruptions brought about by the COVID-19 pandemic.

Susquehanna analyst Christopher Rolland, who has a positive rating on Qualcomm and raised his price target to $ 125 from $ 110, in a note titled “Huawei … Out.a.the.wei,” called the “show star” deal in Wednesday’s earnings report.

In addition to paying $ 1.8 billion in royalties back, Rolland estimates that Huawei will pay $ 200 million to $ 250 million in licensing Qualcomm technology, or QTL, quarterly royalties.

“Beyond Huawei’s solution, COVID continues to negatively affect global handset units, although the high-end and 5G segment continue to grow, helping to support Qualcomm’s profitability,” Rolland said. .

Cowen analyst Matthew Ramsay, who has a better rating and raised his price target to $ 130 from $ 115, said the Huawei settlement opened a share of about $ 1 or more “out of purgatory.”

“With all major OEMs now licensed for 5G, doubts about the QTL business model should be firmly dismissed,” Ramsay said.

Samik Chatterjee, an analyst at JP Morgan, which has an overweight rating and raised its price target to $ 120 from $ 108, said Qualcomm’s leadership in 5G technology before the launch was ” central settlement ”.

“In addition, to reach an agreement with Huawei against the background of increased tensions between the United States and China, as well as recent U.S. restrictions that suppress HiSilicon’s ability to access to 5G chipsets, we believe it will lead to expectations for a bull case around potential shipments of Qualcomm 5G to Huawei in the future to support its smartphone launches, ”said Chatterjee.

Oppenheimer analyst Rick Schafer, who holds the performance rating on Qualcomm, said it will be all the positives of the settlement, he stays on the sidelines.

“We see an additional risk for QTL from the uncertainty in the sale of a 5G smartphone given to the consumer challenged discretionary spending and a potentially adverse FTC ruling,” Schafer said.

Qualcomm’s shares are up 21% for the year, compared to a 16% increase in the PHLX SOX Semiconductor Index,
+ 1.79%,
18% gain for Nasdaq COMP-tech’s Naturat Composite Index,
+ 0.41%,
and an increase of 0.6% from the S&P 500 SPX index,
-0.43%.


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