NVIDIA's (NVDA) Qualcomm/Samsung Case Provides 'Substantial' Opportunity - Needham & Company

Needham & Company affirms NVIDIA (Nasdaq: NVDA) at Buy with a price target of $27 following receipt of a favorable pre-trial ruling in its case against Qualcomm and Samsung.

Analyst Rajvindra Gill commented, We believe the case, which is expected to begin in late June, could be a substantial opportunity for NVDA, given it lists a broad array of Samsung mobile devices. A decision is expected to be announced in early October. We believe this lawsuit represents an important part of NVIDIA’s IP plans going forward and could signal the beginning of a new aggressive licensing strategy.

Gill also sees Intel's (Nasdaq: INTC) royalty replacement potentially boosting core earnings power. We calculate the INTC royalty stream ($66MM/Q in royalty revenue) that expires in March 2017 represents ~$0.40 of EPS after taxes. We believe the core business could generate $1.50+ of earnings power and that any replacement of the INTC royalty stream would be viewed positively and drive valuation higher, the analyst noted

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