Oppenheimer is out with a pretty big call on Qualcomm (NASDAQ:QCOM), saying they are bullish on the stock and see several reasons to buy the shares. Actually, there are 5 of them:
1) First, OpCo sees strong support for their FY09 estimate of $2.42 and meaningful upside as the 3G smart-phone arms race escalates with RIM and Apple joining the fray.
2) Legal conflict pushing toward resolution: In firm's opinion, the Nokia licensing situation remains the main point of uncertainty for QCOM. They view the July Delaware case as a turning point and potential catalyst for a resolution within the next year. Firm expects the Broadcom legal overhang to be lifted by year-end as the workarounds are implemented.
3) Third, analysis of large growth funds suggests most are on the sidelines. As QCOM's earnings reaccelerate, more will have to add to positions. Firm believes as much as $1.8B could flow into the name as a result.
4) With an improving legal front, strong smart-phone contribution and a return to earnings growth post stripping out Nokia, they see a case where historical P/E multiples of 23x can be supported. OpCo is adjusting their price target accordingly, using a 23x P/E multiple on our 2009 earnings estimate of $2.42 yielding a $56 price target (up from $52)
5) With QCOM still active on the buyback front we could see another ~$0.02 of accretion if the company exhausts the nearly $2B left on its current plan.
Notablecalls: Take a look at QCOM chart - the stock is on a verge of a major break-out. Opco's Ittai Kidron is out with a kick-arse call and this will give the stock the needed push higher.
QCOM's a keeper here, for sure.