Qualcomm Inc (QCOM)

[khemara_qc]

Analyst Is 'Fundamentally Bullish' On Qualcomm
R.M. Schneiderman, 07.17.06, 12:21 PM ET

http://www.forbes.com/2006/07/17/qualcomm-0717markets08.html?partner=yahootix

Despite potential legal risks, wireless technology company Qualcomm (nasdaq: QCOM - news - people) offers strong upside from current levels, according to a recent report by UBS Investment Research.

UBS analyst Maynard Um upgraded the San Diego-based company's stock to "buy" from "neutral," citing solid long-term growth prospects.

"Our fundamentally bullish stance largely stemmed from potential growth in the WCDMA market," he said, referring to the wideband wireless technology.

Nokia (nyse: NOK - news - people ) and Qualcomm are renegotiating royalty agreements, set to expire in April of next year. Nokia is trying to get a more favorable rate.

"We believe an agreement is in the interest of both parties and ultimately expect resolution," said Um. "In the interim, both parties are likely to continue to position themselves to gain leverage in negotiations, which could cause some share price volatility."

While Qualcomm's royalty and litigation issues remain a concern, Um said, investors are already anticipating a European Union investigation. The EU is debating as to whether formally investigate claims that Qualcomm has failed to fairly and reasonably license its technology.

The UBS analyst said an announcement could come as soon as August and that the EU is likely to proceed with a formal investigation. UBS said that it does not expect an investigation to result in a "material financial impact" on Qualcomm.