FTC Allegations Fail to Sink QUALCOMM, Inc. (QCOM)

QUALCOMM, Inc. (QCOM) is on the rebound after getting smacked with charges from the FTC

Jan 18, 2017 at 12:27 PM
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Shares of QUALCOMM, Inc. (NASDAQ:QCOM) are on the rebound, after they dropped 4% Tuesday on charges filed against the chipmaker by the Federal Trade Commission (FTC) for anti-competitive practices. Specifically, the regulatory agency said the company blocked "innovation that would offer significant consumer benefits," by creating "a tax" on competitors using similar processors. QUALCOMM responded to the allegations last night, saying the allegations are "significantly flawed." After dipping out of the gate today, however, QCOM was last seen up 1.4% at $65.07.

Analysts have been quick to chime in, with UBS cutting its price target on QCOM to $68 from $72. Elsewhere, Bernstein said the case is unlikely to cause problems in QCOM's planned purchase of NXP Semiconductors NV (NASDAQ:NXPI). Overall, the brokerage bunch has been in the stock's bullish corner, with 14 out of 23 rating QCOM a "strong buy," and only one handing out a "sell" recommendation. Plus, the 12-month consensus price target of $73.63 sits at a level the shares haven't seen in more than a year.

In the options pits, meanwhile, there are signs of growing pessimism toward QCOM. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for instance, put buying has picked up in recent weeks, with the equity's 10-day put/call volume ratio of 0.75 seated higher than 77% of the past year's worth of readings.

What's more, QCOM's Schaeffer's put/call open interest ratio (SOIR) of 1.20 indicates put open interest outweighs call open interest among options set to expire in the next three months. Plus, the reading ranks just 1 percentage point from an annual put-skewed high. Total put open interest, meanwhile, is seated in the 98th percentile of its 12-month range,with 367,498 contracts outstanding.

From a technical standpoint, QCOM's bounce coincides with a successful test at the $64 level, which is home to the stock's 30-week moving average. Plus, the stock is fighting for a foothold atop the 120-day moving average -- which has limited pullbacks since last April, after serving as resistance through much of 2015 -- as well as a 23.6% Fibonacci retracement of QUALCOMM, Inc.'s February-through-October rally.

QCOM Daily Chart January 18

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