Qualcomm (QCOM) Offers Some Shelter in Worsening Economy -Deutsche Bank
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Deutsche Bank is out with a research note this morning saying Qualcomm (Nasdaq: QCOM) "offers some resilience in difficult economic times." The firm maintains its Buy rating.
The firm said it has stress tested its model on Qualcomm to see if it could survive a "worst case scenario". Despite a concerning macroeconomic picture, Deutsche believes Qualcomm's underlying growth remains significant.
In its worst-case model, Deutsche lowered Qualcomm's estimated "CY09 CDMA growth rate to 0% and took WCDMA growth to 30%" (Deutsche is currently modeling up 4% and 41%, respectively), which resulted in a 6% decline in earnings and sales from the firm's current estimates. Further, "if
CDMA units decline by 5% and WCDMA grows by only 20%, earnings would decline by 11%."
Deutsche believes its estimates for Qualcomm could be conservative, as each 50 basis point raise in royalty rates adds 2.5% to EPS.
Although the firm believes macro conditions could worsen, Deutsche calls Qualcomm "undervalued at current levels." The firm points out that the stock is currently trading at a discount (15x CY09 EPS) to even its worse case scenario multiple of 17x.
QUALCOMM Incorporated designs, manufactures, and markets digital wireless telecommunications products and services based on its CDMA technology and other technologies.
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Time to short
Qualcomm is massively overvalued. World is moving quickly toward solutions that rely less on Qualcomm patents, the time to get out is now before Qualcomm becomes completely irrelivant.
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delusional shorts
JD on Oct 1, 2008 02:42 PMJin is contradicting the article with bogus opinion with no backing of facts. Obviously a short seller in trouble. I hope the FED bans short selling for ALL stocks to get rid of these bottom feeders. QCOM is strong, great business model, great earnings, great potential and the fact that NOK is loosing market share is testament to GSM being replaced by CDMA and WCDMA. Take that Jin!