If the Wells Fargo report has already been posted, my apologies.
ljm
SAN FRANCISCO, Dec. 11 /PRNewswire-FirstCall/ -- Casey Ryan,
telecommunications analyst at Wells Fargo Securities, has re-initiated
coverage on the shares of QUALCOMM, Inc. (Nasdaq: QCOM) ($39.61) with a Sell
rating and price target of $26.00.
Below are direct quotations from Mr. Ryan's research report:
* We are re-initiating coverage on QUALCOMM, Inc. with a Sell rating,
based on our view that investors persistently overvalue the company. We
believe that investors who expect growth rates to continue at their current
pace are in denial about GSM being the dominant global wireless standard.
QUALCOMM, in our opinion, is unlikely to dominate the chipset market for
W-CDMA handsets.
* We believe that QUALCOMM is overvalued based on our earnings projections
and that the stock is priced for perfection. QUALCOMM shares are currently
trading at 34.7x our FY03 EPS estimate and 9.3x our FY03 revenue estimate. We
believe that investors who wish to own QUALCOMM shares above $30.00 are
expecting overall handset sales to increase, CDMA 1xrt to become the dominant
handset technology, and for infrastructure spending to increase in 2003. We do
not believe that any of these events will occur and, therefore, believe that
QUALCOMM will fall into the range of $25.00 to $30.00 per share. We value
QUALCOMM at 20.0x our FY03 EPS estimate of $1.14, and in addition, we add back
the company's cash per share of $3.26, which yields a price target of
approximately $26.00. Our valuation table does not show QUALCOMM to be
overvalued when compared against some wireless peers, but we would suggest
that investor expectations for the group have become significantly ahead of
reality.
* We estimate that QUALCOMM will achieve revenue of $3.4 billion and EPS
of $1.14 in FY03. We believe that chipset sales should decline and royalty
payments should rise after the company's first fiscal quarter, as GSM networks
migrate toward W-CDMA. For FY03,we expect 98 million total MSM chipset sales,
87 million of which we believe should be 1xrt. We expect royalty payments to
rise to just over $1.0 billion in FY03 from $847 million in FY02. For FY04, we
project revenue of $3.3 billion and EPS of $1.08, based primarily on our
expectation of lower chipset sales in FY04 and slower growth in royalty
payments.
* The risks in owning shares of Nokia include the following: we believe
that QUALCOMM's financial statements are complex and that the true condition
of the company's business may be difficult for analysts and investors to
understand (pay particularly close attention the company's activities in its
strategic initiatives segment); if the company fails to develop technically
superior products in a timely fashion, its business may decline substantially;
QUALCOMM relies heavily on its engineering and research and design
professionals and so if it is unable to retain such professionals, its future
viability could be seriously impacted.
The price targets indicated in the chart above may be adjusted for stock
splits. Where the price target was originally given as a range, the
midpoint of the range has been used.
Until February 15, 2001, WFS used the following system for analyst
ratings: Strong Buy, Buy, Accumulate, Hold, Sell.
From February 15, 2001 until July 9, 2002, WFS used the following system
for analyst ratings: Strong Buy, Buy, Market Perform, Underperform, Sell.
The current rating system, explained above, has been in effect since
July 9, 2002.
The research analyst principally responsible for preparing this research
report received compensation that is based upon various factors, including
Wells Fargo Securities' total revenue, a portion of which is generated by
Wells Fargo Securities' investment banking revenues.
Wells Fargo Securities, LLC is a full service investment banking firm.
Headquartered in San Francisco with offices in Southern California and the
Pacific Northwest and on theEast Coast, Wells Fargo Securities is dedicated
to building long-term relationships using the strength of its equity capital
markets and Wells Fargo & Company products to provide outstanding service and
support to its clients.
Investments made through Wells Fargo Securities, LLC: (1) are not insured
by the FDIC; (2) are not deposits or other obligations of, or guaranteed by,
Wells Fargo Securities, Wells Fargo & Company or any of its affiliates; (3)
are not guaranteed by any Federal governmental agency (excluding U.S.
Government and federal agency securities); and (4) are subject to investment
risks, including possible loss of principal amount invested.
The study on these pages is not a complete analysis of every material fact
regarding any company, industry or security. The opinions expressed herein
reflect the judgment of the author at this date and are subject to change
without notice. Facts have been obtained from sources considered reliable but
are not guaranteed to be accurate. Wells Fargo Securities, its directors and
employees and their families may have a position in the securities of the
companies described herein, and may make purchases or sales while this report
is in circulation. Wells Fargo Securities or an associated person will sell to
or buy from customers on a principal basis. Additional information on the
subject companies mentioned herein is available upon request.
Wells Fargo Securities, LLC is a member of the National Association of
Securities Dealers, CRD number 7665.
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SOURCE Wells Fargo Securities, LLC
-0- 12/11/2002
/CONTACT: Katina Austin of Wells Fargo Securities, LLC, +1-212-772-9329/
/Web site: wellsfargo.com /
(WFC QCOM)
CO: Wells Fargo Securities, LLC; QUALCOMM, Inc.; Wells Fargo & Company
ST: California
IN: FIN TLS CPT
SU: INO
CS-JO
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