We will maintain our $75 fair value estimate for Best Idea, narrow-moat Qualcomm, as well as our $255 fair value estimate for narrow-moat Broadcom, as a U.S. Presidential Order by Donald Trump’s administration appears to have effectively blocked Broadcom’s attempt to acquire Qualcomm, citing national security concerns. The order also rejected Broadcom’s slate of independent directors to be nominated at Qualcomm’s annual shareholder meeting, while also ordering Qualcomm to move up the date of the meeting, which will now be held on March 23. We reiterate that our fair value estimate for Qualcomm continues to hinge on the firm’s standalone prospects, especially once the company closes its deal with NXP Semiconductor. On the Broadcom side, again, our fair value estimate is on a standalone basis. We continue to believe that the acquisition of Qualcomm at the revised bid price of $79 per share would be solidly accretive for the firm, but such upside no longer appears to be in the cards for Broadcom. We anticipate that Broadcom will remain on the hunt for semiconductor M&A which would allow the firm to capture chip businesses with leading market share positions and significant room to strip out costs and generate hefty accretion.
We also note a Wall Street Journal report from Friday, suggesting that Intel may make a bid for Broadcom, in an attempt to squash a Broadcom-Qualcomm pairing. We were highly skeptical that such a deal would pass regulatory muster, either for an independent Broadcom or certainly for a combined Broadcom-Qualcomm entity. The executive order may have done the dirty work for Intel and it may no longer find a need to even entertain the thought of bidding for Broadcom going forward.
Notatet inneholder fremskrivninger som er usikre av natur. Morningstar publiserer dette i utdanningsøyemed. Notatet ble først publisert 12.3.2018 på Morningstar Select. Morningstars aksjeanalytikere dekker 1500 selskaper globalt basert på en enhetlig metode. Se viktige detaljer nedenfor og forhør deg alltid med en autorisert finansiell rådgiver før kjøp eller salg av verdipapirer.
