Wolfe Research: Apple's related business may bring unfavorable factors, downgrading Qualcomm's rating
Wolfe Research downgraded Qualcomm's rating mainly due to concerns about its business relationship with Apple. The analysts at the firm stated that any revenue loss related to Apple is a negative factor. In addition, Qualcomm's growth in the Internet of Things (IoT) business is also not convincing to investors. However, Wall Street analysts generally have a positive outlook on Qualcomm
According to CNBC, on Monday, Wolfe Research downgraded its rating on Qualcomm Inc. (QCOM.US) for various reasons, including concerns about its business with Apple Inc. (AAPL.US). Analyst Chris Caso lowered the rating on Qualcomm from "outperform" to "market perform." Caso expressed worries about the impact of Apple's efforts to develop in-house modem chips. Despite Qualcomm's P/E ratio of 15, which is considered reasonable, any loss of revenue related to Apple is seen as a negative factor that doesn't fully meet analysts' expectations.
In September this year, Apple and Qualcomm announced an extension of their collaboration agreement until 2026. Qualcomm will provide Snapdragon 5G ModemRF Systems for Apple's smartphones.
Furthermore, Caso noted that Qualcomm's boost from the high-end Android market has now normalized, and any growth in its IoT business (which could be the focus of the company's November analyst day) is "harder" to convince investors.
Nevertheless, analysts generally remain bullish on Qualcomm (QCOM.US), with a consensus rating of "buy" on Wall Street