SAN DIEGO—Investment-banking firm ThinkEquity Partners L.L.C. downgraded its opinion on Qualcomm Inc.’s stock based on what the firm said was an anticipated slowdown in first-quarter handset sales and lowered forecasts for chipset revenues in the second quarter.
However, ThinkEquity said the forecasts won’t change its view that Qualcomm “remains the best play in the wireless food chain.”
ThinkEquity lowered its opinion on Qualcomm from buy to accumulate. ThinkEquity’s price target for Qualcomm shares is $50; shares had been trading at $47.78 at the time of the investment bank’s change in recommendation.
The investment bank based its guidance on four factors.
It reported that handset sales are slower than expected this year, based on distributor comments, and the possibility of component shortages could put a kink in the flow of handsets to the retail market. ThinkEquity specifically cited strong though faltering sales for Samsung Electronics Co. Ltd. and LG Electronics Co. Ltd., and weak sales for a number of Taiwanese handset makers.
Qualcomm, however, is expected to increase its revenue expectations after strong licensing revenues in the fourth quarter. ThinkEquity too revised its estimates for Qualcomm’s first quarter to $1.73 billion from its previous estimate of $1.72 billion.
Finally, the investment bank referred to a wild card of unknown weight: The European Commission’s trial over patent ownership rights in which Qualcomm is involved may generate dubious publicity, despite the acknowledgement that no predictions of the trial’s outcome are possible.
