Merrill Lynch upgraded Qualcomm (QCOM ) to buy from neutral.
Analyst Tal Liani says analysis shows that in the case of 20% WCDMA penetration in Western Europe and Japan over the next few years, Qualcomm's earnings per share could grow from the current $1.35 fiscal 2004 (Sept.) earnings per share estimate to $2.06. Additionally, he expects further third-generation deployment in 2004 in various European countries and Japan.
Liani believes investors should now take a longer view on Qualcomm. He says his $50 12-month target is based on a current p-e multiple of 30, with $2 in achievable earnings per share power in two to three years, discounted in today's value. When the WCDMA roll-out accelerates, Liani says the company's multiple could expand further.