Following the announcement of a settlement with Apple, Qualcomm’s shares, which closed up 23% yesterday, rose as much as 17% today to hit their highest in nearly two decades. As a result, the chip maker added a whopping $30 billion to its market value while also securing its leadership in 5G smartphone chips (via Reuters).
“This was a game changing settlement for Qualcomm and was also a smart move by Apple to clear this noise and focus on 5G smartphones for 2020,” said Dan Ives, an analyst with Wedbush Securities. Wall Street analysts also raised their recommendations and price targets on the company’s stock following the settlement.
Analysts believe Qualcomm could make $2 billion annually by taking Intel’s market share and regain the dominant position it enjoyed during the rollout of 4G back in 2010.
“In the US, around 5G it’s Qualcomm’s world and everyone else is just paying rent,” said Dan Ives.
At least three brokerages raised their ratings and nine ratcheted up their price targets. Stifel made the most aggressive move by raising its target by $43 to $100 – well above the median price target of $75.85. Of the 25 brokerages covering the stock, 14 rate it “buy” or higher and the rest have a “hold” rating, according to Refinitiv data.
While Qualcomm has not disclosed the exact terms of the settlement, analysts estimate that Apple withheld $5 billion, or about $2 per share, under its previous royalty payment agreement.