Banc of America Downgrades Qualcomm to Neutral

Analyst Tim Long sees moderating earnings growth for the cell-phone maker

Banc of America downgraded Qualcomm (QCOM ) to neutral from buy.

Analyst Tim Long says although handset fundamentals remain positive, he believes the momentum behind upward earnings revisions for Qualcomm will slow after the second quarter. He thinks this may lead to multiple contraction on moderating earnings growth.

Lomg cut his 150 million 2004 CDMA phone estimate to 147 million, and cut the 170 million 2005 estimate to 165 million. He's more cautious on India and China, and sees risk to 3G estimates. Long also cut the $1.80 fiscal 2004 (Sep.) earnings per share estimate to $1.78, and cut the $1.95 fiscal 2005 estimate to $1.88. He cut the 9% fiscal 2005 sales growth estimate to 6%.

Based on his stalled estimate revisions, Long thinks the stock should trade at 30 times his calendar 2005 earnings per share estimate, yielding a $60 price target.

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