NEW YORK (TheStreet) -- Shares of Qualcomm (QCOM) - Get Qualcomm Inc Report were lower in mid-morning trading on Friday as the stock's rating was increased to "market perform" from "underperform" at BMO Capital Markets.
The firm also raised its price target to $70 from $53 on shares of the San Diego-based chipmaker.
While BMO is "neutral" on Qualcomm's recently-announced deal to buy NXP Semiconductors (NXPI) for $47 billion or $110 per share, the firm said that Qualcomm stock "will stay in a trading range despite challenging fundamentals in Qualcomm's core business."
The firm estimates that the NXP deal will be 30% accretive to Qualcomm's earnings per share "once the synergies are realized."
Purchasing NXP adds revenue diversity, as NXP's business would shift Qualcomm's mobile exposure to 70% of revenues from 92% previously, BMO said.
Challenges still exist for Qualcomm's royalty and chips businesses, the firm added.
BMO noted that the company's loss of market share in the chips segment has been "meaningful," and the firm "[expects] this to continue."
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Separately, TheStreet Ratings objectively rated Qualcomm stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rated this stock as a "buy" with a ratings score of B.
The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and attractive valuation levels. We feel its strengths outweigh the fact that the company shows weak operating cash flow.
You can view the full analysis from the report here: QCOM