Shares of Qualcomm (QCOM) - Get Report are slipping after Bernstein analyst Stacy Rasgon downgraded the stock to Market Perform, citing a lack of confidence in the company's long-term growth and Wall Street estimates that appear to be too high for the quarter. This comes less than a month after reports indicated that Apple's (AAPL) next iPhone will use modems from Intel (INTC) - Get Report , replacing Qualcomm's chips in some versions of the smartphone.

LONG-TERM ISSUES REMAIN: With Qualcomm's shares closer to her target, Bernstein's Rasgon downgraded the stock to Market Perform from Outperform. The analyst lacks confidence in the long-term growth story for the company and thinks Wall Street estimates for Qualcomm's September quarter remain too high, due to unrealistic licensing expectations. Rasgon speculated that consensus may be modeling in "catch-up" from new China deals, which suggests that the licensing outlook could miss expectations if they don't sign deals, or that there is limited upside to numbers if they do. Furthermore, the analyst said she expects the next few quarters to be volatile, noting that long-term structural issues remain. She kept a $55 price target on the shares as she was already modeling it to reflect a "no growth" scenario, with the company not in secular decline, but also never growing free cash flow again.

APPLE WIN: Citi analyst Christopher Danely raised his price target for Intel to $35 from $31 in his own note to investors this morning, as he expects the company's stock to go up due to better PC demand and the design win in Apple's iPhone 7. Danely said he believes Intel has won roughly 25% share of the iPhone 7 away from Qualcomm. Additionally, he noted that his channel checks indicate demand from the PC end market has improved due to re-stocking. However, the analyst reiterated a Neutral rating on Intel's shares, as he expects the upside to be temporary and points out that the Apple business has negative gross margins.

PRICE ACTION: In morning trading, shares of Qualcomm had dropped almost 2% to $52.66, while Intel's stock gained over 1.25% to $32.34 per share.

Reporting by Jessica de Sa-Mota.

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