Higher Target on Buy-Rated QCOM

We maintain a Buy rating for Qualcomm, Inc. (QCOM - Analyst Report), the largest developer of digital wireless chipsets based on CDMA technology, as the company continues to perform well in a turbulent economic environment, primarily due to technical superiority.

We expect Qualcomm to benefit from continued strength in cellular handset demand and new 3G wireless rollouts based on CDMA EV-DO and WCDMA technologies. We also believe the company's royalty rates should withstand contract challenges. The company's investment in new areas that leverage mobile media, data access cards, financial mobility, and next-generation multimedia combination chipset technologies, are also expected to endorse future shareholder payout in the form of increasing earnings and dividends.

Qualcomm shares are trading at 25.8x our estimated earnings for fiscal 2008, which represent a premium to both the S&P 500 and the industry group averages. However, after adjusting for the $6.43 per diluted share net cash and marketable securities, Qualcomm is trading at 22.45x to our forward 2008 earnings. We, therefore, raise our six-month target price of $55, which is based on a net of cash multiple of 25x to our estimated 2008 earnings plus $6.43 per share net cash balance.

Nalak Das contributed to this report.

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