Qualcomm's Future With Apple Remains Unclear

Apple Inc. AAPL's not-so-quiet dispute with QUALCOMM, Inc. QCOM has created an uncertain outlook for Qualcomm, and even Wall Street's top analysts aren't sure when or if the conflict will be resolved.

UBS

UBS's Stephen Chin maintains a Neutral rating on Qualcomm's stock with an unchanged $58 price target Friday. The analyst is not sure how or when the conflict will be resolved, but in the meantime, Qualcomm cautioned it will recognize zero license sales for Apple's contract manufacturers in the June-ending quarter.

Chin noted, not even two weeks ago, Qualcomm expected to collect at least some royalties from Apple. The analyst added, Qualcomm won't see $500 million in quarterly sales from Apple, $420 million of which is attributed to the iPhone and $80 million from cellular-equipped iPads.

However, sales of Qualcomm's modem chip to Apple are expected to continue as normal, and the analyst has doubts an alternative supplier such as Intel Corporation INTC even has enough capacity to meet the expected iPhone demand for the bottom half of 2017.

BMO Capital Markets

BMO Capital Markets' Tim Long maintains a Market Perform rating and $54 price target on Qualcomm's stock last week following the "surprising" developments given a long-term relationship between the company and Apple.

According to Long, Qualcomm's announcement of zero revenue from Apple-related royalties justifies an earnings per share revision. The analyst moved his 2017 earnings per share estimate from $4.75 to $4.14 per share while 2018's was moved lower from $4.75 per share to $3.23 per share.

Long emphasized Qualcomm's stock is expected to be stuck in a tight range so long as the conflict with Apple continues. Outside of the conflict, the analyst sees multiple negative catalysts for the legacy business and management is "too optimistic" about the overall industry growth.

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Structural Headwinds, Apple Feud Weigh On Qualcomm's Outlook

Qualcomm's Apple Quarrel Likely To Remain Overhang Despite Strong Quarter ________ Image Credit: By Ryo FUKAsawa - https://www.flickr.com/photos/fukapon/21879687510, CC BY 2.0, via Wikimedia Commons