Qualcomm Inc (QCOM)

[Jim Mullens]

A Quick follow-up to yesterday’s post re: K-qc and “history repeating itself”.

Based on First Call’s “analyst” consensus estimates (03/25/05), these “analysts” fully recognize Qualcomm’s LTG potential as evidenced by their 20% LT Growth rate, further confirmed by their FY06 EPS reflecting a 25% yoy increase.

EPS 05................$1.17
EPS 06................$1.46.......25% yoy
LT Growth %..........20%

Using the 20% LTG and a PEG of 1.7 yields as PE of 34.
Using the 20% LTG applied to the consensus 06 EPS yields an 07 EPS of $1.75. If WCDMA robustly ramps as expected in the last half of 2005, EPS estimates for 06 and 07 could even be higher than the 25% and 20% mentioned.

The “analyst” community will begin to update their QCOM targets sometime after the Q provides its initial FY06 guidance in early November. These new targets will consider both 06 and 07 EPS estimates. Based on the above-

EPS 06 (consensus)..........$1.46 X 34PE = $50
EPS 07 (06 X 20%)............$1.75 X 34PE = $60

More optimistically-
EPS 06
...05 EPS @ $1.22 X 25% growth = $1.52 X 42.5PE (25% LTG X PEG 1.7) = $65

EPS 07
...06 EPS @ $1.52 X 25% growth = $1.90 X 42.5PE (25% LTG X PEG 1.7) = $81

Happy Easter All