Piper Maintains Buy on Qualcomm (QCOM) Following Meetings with Execs

Piper Jaffray recently held investor meetings with several execs at Qualcomm (Nasdaq: QCOM). The firm said "While management did not update its guidance, we believe positive secular trends remain in tact for Qualcomm to grow EPS during FY09." Piper maintains its Buy rating and $62 price target on Qualcomm. The firm also kept Qualcomm on its Alpha List, meaning Piper believes the stock will see above-average returns over the next 3-6 months.

The firm expects Qualcomm to improve margins on the back of an improving Qualcomm Technology Licensing mix and likely market share gains for its Qualcomm CDMA Technologies segment. Additionally, Piper feels that given Qualcomm's strong balance sheet, the company will continue to return cash to its shareholders through a dividend and ongoing stock repurchases.

Piper believes "China offers the most potential for upside" as it feels its FY09 estimates on Qualcomm could be "conservative" given that the company has developed a "strong relationship with leading carriers such as China Telecom (NYSE: CHA) and China Unicom (NYSE: CHU)". Looking toward the long-term, Piper sees initiatives such as SnapDragon and Gobi gaining traction with customers and ramping during FY10.

With shares of Qualcomm trading around $41.40 today (up 3%), the firm's price target represents potential price appreciation of nearly 50% from current levels.

QUALCOMM Incorporated designs, manufactures, and markets digital wireless telecommunications products and services based on its CDMA technology and other technologies.

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