Qualcomm Inc.’s share price surpassed its previous high of $ 100 set two decades ago on Thursday after the chipmaker revealed that it resolved a license dispute with the world’s largest smartphone maker, clearing the way for as the new 5G standard is implemented.
Qualcomm QCOM,
The shares settled at a record intraday price of $ 107.40 on Wednesday, surpassing its previous high of $ 100.00 set on January 3, 2000, just before the dotcom crash. After that, the closest the $ 100 shares came to was $ 95.91 on January 17. The shares rose 15% to $ 106.84 in trading on Thursday.
In addition to beating Wall Street earnings estimates for the quarter on Wednesday, Qualcomm announced a highly anticipated patent licensing agreement with Huawei that it had been sparking for a year when it recorded the results of a deal with Apple Inc. AAPL,
Of the 29 analysts that cover 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, compared to $ 98.48 previously, according to FactSet data.
On Wednesday night, it was also revealed that Huawei from China had overtaken Samsung Electronics Co. 005930 from South Korea,
As the world’s largest provider of smartphones due to supply disruptions caused by the COVID-19 pandemic.
Susquehanna analyst Christopher Rolland, who has a positive rating on Qualcomm and raised its target price to $ 125 from $ 110, in a note titled “Huawei … Out.a.the.wei”, called the deal the “star of the show “in Wednesday’s earnings report.
In addition to paying $ 1.8 billion in arrears, Rolland estimates that Huawei will pay $ 200 million to $ 250 million in Qualcomm technology licenses, or QTL, royalties per quarter.
“Beyond the agreement with Huawei, COVID continues to negatively impact global phone units, although the high-end and 5G segment continues to grow, helping to support Qualcomm’s profitability,” Rolland said.
Cowen analyst Matthew Ramsay, who has a superior performance rating and raised his target price to $ 130 from $ 115, said the Huawei deal unlocked around $ 1 or more of a share of “purgatory” earnings.
“With all of the world’s leading OEMs licensed to 5G, doubts about the QTL business model should be firmly dismissed,” Ramsay said.
JP Morgan analyst Samik Chatterjee, who is overweight and raised his price target to $ 120 from $ 108, said Qualcomm’s leadership in 5G technology before launch was “critical” to the deal.
Furthermore, in reaching an agreement with Huawei in the context of intense tensions between the US and China, as well as recent US restrictions that hinder HiSilicon’s ability to access 5G chipsets, We believe this will raise expectations for a bullish case surrounding possible Qualcomm 5G shipments to Huawei in the future to support its smartphone launches, “Chatterjee said.
Oppenheimer analyst Rick Schafer, who has a performance rating at Qualcomm, said that all the positives of the deal, he remains on the sidelines.
“We see additional risk for QTL due to uncertainty in 5G smartphone sales given consumer discretionary spending and the potentially adverse FTC ruling,” Schafer said.
Qualcomm’s shares are up 21% on the year, compared to a 16% gain on the PHLX SOX Semiconductor Index,
an 18% gain for the Nasdaq Composite Heavy Technology COMP Index,
and a 0.6% increase for the S&P 500 SPX index,
.
