Cowen Sets Lofty Goal for Surging Qualcomm Stock

QCOM has added 35% since its April lows

Managing Editor
Aug 6, 2018 at 10:01 AM
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Qualcomm, Inc. (NASDAQ:QCOM) stock is up 0.2% to trade at $65.54 this morning, after Cowen upgraded the chip name to "outperform" from "market perform," while boosting its price target by $16 to $80. The analyst in coverage cited QCOM's recently announced stock buyback program, along with "progress in royalty disputes with Huawei/Apple" and cost-cutting initiatives, as reasons for the hike. 

The $80 level represents territory Qualcomm stock has not eclipsed since 2014. QCOM fell to an annual low of $48.56 on April 26, but since then has rallied 35%. The shares are currently on track for a fifth straight win, and their highest close since February. 

Despite the stock's upside momentum of late, many analysts remain wary. Of the 17 brokerages covering QCOM, nine rate it a "hold" or "strong sell." Furthermore, the stock's average 12-month price target of $68.05 sits just above the QCOM stock's current perch, implying there is ample room for more upgrades and/or price-target hikes in the future. 

In the options pits, though, the mood is decidedly more bullish. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculative players have bought to open 32,622 calls in the last 10 sessions, compared to just 9,515 puts. The resultant call/put volume ratio of 3.43 ranks in the 63rd percentile of its annual range, indicating a slightly healthier-than-usual appetite for long calls over puts during the past two weeks.

Lastly, those looking to buy near-term options on Qualcomm stock may want to consider doing so now. This is per the stock's Schaeffer's Volatility Index (SVI) of 17%, which ranks in the 4th annual percentile. This indicates that short-term options are pricing in relatively low volatility expectations at the moment.

Furthermore, QCOM has been a good target for premium buyers during the past year. That's according to its Schaeffer's Volatility Scorecard (SVS) of 79 out of 100, which shows it's tended to make much bigger-than-expected moves on the charts compared to what the options market was expecting.

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