JPMorgan analyst Samik Chatterjee upgraded Qualcomm (QCOM) to Overweight from Neutral and raised his price target for the shares to $88 from $54.
The stock in premarket trading is up 5%, or $3.82, to $74.27 after rallying 23% before yesterday's close.
The settlement with Apple (AAPL) appears to be "overwhelmingly positive for Qualcomm despite the absence of details at this time," Chatterjee tells investors in a research note. The agreement includes a six-year patent licensing agreement and a multi-year chipset agreement, estimated by Qualcomm to drive earnings accretion of $2 per share, the analyst points out. Further, he believes the agreement opens up the opportunity for Qualcomm to resume chipset supply to Apple.
Chatterjee says his upgrade of Qualcomm reflects a combination of upside driven by 5G leadership and dissipation of downside risks from litigations following the agreement with Apple.
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