Qualcomm's fear of a takeover will force management to boost the stock price, says Nomura

  • Nomura upgraded Qualcomm to a buy rating and raised its target price to $75 from $58.
  • The firm said a Broadcom bid is "the most attractive long-term option for Qualcomm shareholders" but predicted several short-term bumps.
Qualcomm Inc. CEO Steve Mollenkopf.
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Qualcomm Inc. CEO Steve Mollenkopf.

Qualcomm is likely to make aggressive moves to keep shareholders happy in the next two quarters while the company faces a possible hostile takeover attempt from Broadcom, research firm Nomura said Tuesday.

The firm upgraded Qualcomm to a buy rating and raised its target price to $75 from $58.

"We believe Qualcomm leadership is very smart, but over the last several years, the San Diego-based management team at times has been unassertive and complacent," Nomura wrote in a note. "Though now with Broadcom's hostile takeover attempt analogous to a 'gun to the head,' we expect the company to more aggressively focus on driving shareholder value in order to remain a standalone franchise."

Broadcom in November made an unsolicited offer for the rival chipmaker. Qualcomm rejected the $103 billion deal, saying it devalued the company.

In December Broadcom nominated its first slate of replacement board members who were later rejected by Qualcomm, setting the stage for a bitter proxy battle.

Nomura said a Broadcom bid is "the most attractive long-term option for Qualcomm shareholders" but predicted several short-term bumps including a strong earnings report and the closure of the NXP Semiconductors deal.

Qualcomm rose 2 percent in morning trading Tuesday.

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