The market has not however completely adjusted the value of Qualcomm stock after its settlement with Apple ultimate week, Morgan Stanley analysts wrote in a remember on Tuesday.
That implies that Qualcomm stock could go as lots as lots as 15% higher, to a aim price of $95, analyst James Faucette and his employees wrote.
Qualcomm is already on a tear. The stock rose about 20% the day it launched its settlement with Apple, and continued to climb after that.
Qualcomm holds important psychological property related to cell networks, and kit makers like Apple pay it royalty prices to make use of those so-called “standards” patents. In 2017, Apple sued Qualcomm, claiming that these licensing practices have been unfair and anticompetitive.
Some analysts think about Qualcomm gained the dispute. Apple ended up paying Qualcomm a one-time price that has been estimated to be throughout the billions of , and purchased a license to those patents and modem chips immediately from Qualcomm at a price estimated to be $8 or $9 per phone.
“The Apple agreement structure is very consistent with what we thought it should be (Apple paying a meaningful per phone royalty and returning to use Qualcomm modems),” the Morgan Stanley analysts wrote. “However, we were very surprised that Apple chose to settle now and return to what we estimate had been roughly the status quo; instead we had expected that Apple would wait to see if the courts would hand it more negotiating leverage.”
One massive goal for the Qualcomm bull case is that Morgan Stanley analysts said that Qualcomm is the “key enabler” of next-generation 5G networks. Qualcomm’s chokehold on 5G modems is one goal Apple settled — in another case, it would want been late to launch a 5G iPhone, which is anticipated in 2020.
The analysts added: “We think Qualcomm’s new horizons in 5G opportunities are relatively cheap/free options post Apple-settlement, Qualcomm enjoys a range of underappreciated options outside handsets that have the potential in the long run to make Qualcomm perhaps the largest semiconductor company in the world.”