Morgan Stanley Downgrade Sends QCOM Stock Lower

Morgan Stanley's note comes just one session after QCOM hit a 20-year high

by Lillian Currens

Published on Nov 11, 2019 at 9:49 AM

A bear note from Morgan Stanley has sent the shares of Qualcomm, Inc. (NASDAQ:QCOM) down 3% to trade at $91.15 this morning. Specifically, the analyst dropped its rating to "equal-weight" from "overweight," but raised its price target to by $1 to $90. The brokerage firm said that while a deal between the U.S. and China -- paired with growing new markets -- could drive the stock higher, slow adoption of 5G and headwinds induced by growing China competition could bring the stock's value all the way down to $55. 

This dip comes just one session after QCOM's 20-year high of $94.11, hit on Friday, Nov. 8. During the last few weeks, the equity has been in rally mode, following a sharp bounce off its 140-day moving average last month. In fact, the security just came off a weekly gain of 12.5%, its fourth straight and biggest weekly win in nearly seven months. 

Despite this recent price action, the brokerage bunch has been wary of the semiconductor name, with nine of the 17 in coverage giving it a "hold" or worse rating, prior to today. What's more, the stock's 12-month consensus price target of $86.95 is at a slight discount to Friday's close. 

The options pits have been unusually bearish, too. Currently, QCOM sports a 50-day put/call ratio of 0.56 on the the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) that sits in the 88th percentile of its annual range. This suggests a bigger-than-usual appetite for puts of late. 

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