NEW YORK (TheStreet) -- Qualcomm (QCOM) - Get Report stock is gaining 0.61% to $51.45 in midday trading on Monday after Canaccord analysts said the San Diego-based wireless technology company is expected to see long-term growth from licensing agreements. The firm reiterated their "buy" rating and $65 price target.
"[W]e are impressed by the long-term technical roadmap, believe the more optimistic long-term [Qualcomm Technology Licensing] growth targets are achievable, and appreciate the new focus of the management team on streamlining the business and on cost controls," Canaccord said in an analysts note this morning after meeting with Qualcomm's management.
Soft smartphone sales are expected to impact short-term financial results, but a new licensing agreement with Chinese firms should drive growth in the second half of 2016 and into 2017, analysts noted.
Management expects annual Qualcomm Technology Licensing revenue to surpass $10 billion by 2020, compared with $7.95 billion for the 2015 fiscal year.
Earlier this month, Qualcomm signed a patent license agreement with Lenovo Group (LNVGY) for an undisclosed amount.
This deal is expected to pressure other Chinese original equipment manufacturers to seek licensing agreements with Qualcomm, analysts added.
Qualcomm's stock price is expected to increase in the long-term because of these licensing agreements and more stable royalty rates, Real Money Pro's David Katz wrote in a post on February 19.
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Separately, Qualcomm has a "hold" rating and a letter grade of C+ at TheStreet Ratings because of the company's strengths, such as expanding profit margins, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures, and its weaknesses, including deteriorating net income, generally disappointing stock performance and feeble earnings per share growth.
You can view the full analysis from the report here: QCOM
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