Bernstein SocGen Group analyst Stacy Rasgon downgraded Qualcomm (NASDAQ: QCOM) from Outperform to Market Perform with a price target of $140.00 (from $175.00).

The analyst comments: "While bears have noted optical headwinds from the AAPL roll-off and an undesirable amount of smartphone exposure, we have been of the belief that the AAPL situation has been well-telegraphed and well understood (by the buyside at least), have thought the AI content opportunity in Android was not fully appreciated, and have liked the longer term diversification story.

However, the memory headwinds building in the industry now appear to have a likely deleterious effect on overall smartphone shipments (with potential for double-digit unit declines this year); exacerbated by the sell-side’s (astonishingly lazy) mis-modeling of the AAPL roll-off we believe numbers (which we already thought looked elevated) now appear much too high, and we believe potential narrative tailwinds (buyback, datacenter day) are probably not enough to offset the current situation amid weak smartphones and other potential narrative headwinds (potential risk associated with expiration of the AAPL license agreement in a year, Samsung share dynamics etc).

We feel a bit bad for the company; they appear to be doing everything right, but are living in a bad neighborhood at the moment, and we suspect things get worse before they get better, and while the stock remains extremely cheap even on our numbers, that becomes less of a support when one can buy actual AI winners for under 15x on “realistic” estimates."

For an analyst ratings summary and ratings history on Qualcomm click here. For more ratings news on Qualcomm click here.

Shares of Qualcomm closed at $130.35 yesterday.