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Avoid Qualcomm on iPhone pricing pressure: Brean

A woman uses an iPhone in Munich, Germany.
Michaela Rehle | Reuters

Investors should avoid Qualcomm due to increased competitive pressures in the smartphone market, according to Brean Capital, which downgraded the shares of the Apple chip supplier to hold from buy.

"The combination of competitive pricing headwinds for Qualcomm CDMA Technologies, lower ASPs (average selling prices) for smartphones (strength is all in low-end), longer form factor change cadences at Apple, and ongoing challenges to its licensing business will result in limited upside from current levels," Brean Capital's Mike Burton wrote in a note to clients Thursday.

He added, "We believe that Apple has had a meaningful influence on the pricing dynamics of mobile devices; if Apple's aspirational device is not holding up the high end of pricing, the entire market tends to suffer."