Qualcomm is likely to make aggressive moves to keep shareholders happy in the next two quarters while the company faces a possible hostile takeover attempt from Broadcom, research firm Nomura said Tuesday.
The firm upgraded Qualcomm to a buy rating and rose its target price to $75 from $58.
“We believe Qualcomm leadership is very smart, but over the last several years, the San Diego-based management team at times has been unassertive and complacent,” Nomura wrote in a note. “Though now with Broadcom’s hostile takeover attempt analogous to a ‘gun to the head,’ we expect the company to more aggressively focus on driving shareholder value in order to remain a standalone franchise.”
Broadcom in November made an unsolicited offer for the rival chipmaker. Qualcomm rejected the $103 billion deal, saying it devalued the company.
In December Broadcom nominated its first slate of replacement board members that were later rejected, setting the stage for a bitter proxy battle.
Nomura said a Broadcom bid is “the most attractive long-term option for Qualcomm shareholders” but predicted several short-term bumps including a strong earnings report and the closure of an NXP Semiconductors acquisition.
Qualcomm rose 2 percent in morning trading Tuesday.
