Cleave to news from CNBC that Broadcom Ltd. (AVGO) is preparing to go contrary with its bid to buy rival chipmaker Qualcomm Inc. (QCOM), one team of analysts on the Terrace suggests that, deal or no deal, there is downside risk in QCOM allocates.
Stifel Nicolaus semiconductor stock analyst Kevin Cassidy mitigated his rating on shares of San Diego, Calif.-based Qualcomm from buy to have, while increasing his price target to $75 from $65. He foresees shares to gain 12.7% over the 12-month period. Closing down 2.7% at $66.52, QCOM reflects an rough 2% gain year-to-date (YTD), while the S&P 500 has increased 17.3% one more time the same period.
In a research note to clients, the Stifel analyst inscribes that Broadcom’s hostile bid for Qualcomm could lead to protracted compacts that present a downward bias to the stock. Two weeks ago, Qualcomm turn thumbs down oned Broadcom’s initial bid, on the basis that the purchase price was too low. Reports now direct attention to that Broadcom is preparing to nominate a slate of individuals to replace all of Qualcomm’s popular board members.
Apple, NXP Uncertainty
If no deal materializes, Cassidy insinuates that QCOM could lose a fourth of its value and plummet to $50, “immediate the $54.84 that the shares closed on November 2, prior to initial circulates of the potential acquisition.”
If Broadcom succeeds, the analyst indicates that since the acquirement would likely face an extended regulatory review and drag out the do business’s close to 12 months after a definitive agreement, shares would most able trade at a discount through 2018. He opines that the price resolution be “high $70 to $80” per share for QCOM.
Ultimately, Cassidy attributes individual factors including the two bad possible outcomes, Qualcomm’s ongoing legal crusade with Apple Inc. (AAPL) and the uncertainty of QCOM’s bid for NXP Semiconductors (NXPI) as ahead him “to the sidelines.” (See also: NVIDIA, Intel, Broadcom Are All Cloud Accepts: RBC.)