Shares of Qualcomm Inc. continued their rocket climb Tuesday, in a parabolic trajectory that’s eerily reminiscent of the chip maker’s halcyon days during the internet bubble, following its settlement deal with Apple Inc.
The stock QCOM, +6.11% ran up 5.7% in afternoon trade, putting it on track for the highest close since its Jan. 3, 2000 split-adjusted record of $89.66, after Morgan Stanley turned bullish and boosted its price target.
Since Qualcomm and Apple announced last Tuesday that the companies have dropped all lawsuits against each other, the stock has now soared 51.6%. That would be the best 5-day stretch since it rocketed 63.3% during the 5-days ending April 26, 1999.
Despite the stock’s meteoric rise in the past week, Morgan Stanley analyst James Faucette raised his rating to overweight, after being at equal weight since Nov. 15, while lifting his price target by 73% to $95, which is 10% above current levels.
“We upgrade to [overweight] as we see new opportunities and optionality as more attractive than risks potentially overlooked by any near-term settlement-induced euphoria,” Faucette wrote in a note to clients.
He said the Apple settlement not only increases earnings substantially, it also expands the “freedom” with which Qualcomm can pursue new opportunities. If the company adds potential “meaningful growth” in other markets, like in autos, earnings growth can accelerate and provide additional tailwind for further valuation expansion. That would lift the stock to its most-bullish case scenario of $120, which is 39% above current levels.
Faucette said that while he takes a more conservative view than most on the pace of 5G ramp, he