Current price: 49.1USDTarget price: 75.0USDOur opinion: buyStreet’s opinion: buy We start a new round of competition with entry on another company but from a different sector. Nowadays, it is hard to imagine any serious portfolio without a tech company in it, so we have decided to be in the trend. We think that when analyzing stocks it is important to not only think about whether the company is good but also the current pricing relative to the true value. It is hard to imagine 50-100% 2-years return potential in top names sounding everyday but we managed to find one. Qualcomm is a name that surrounds us today – because of them, we have our modern processors everywhere, and the company receives some royalties from most of them either in the form of patent royalty or in chips sold. Currently, the technologies, especially in mobile forms, are unmatched – the competition only has the modern generation, while QCOM already has the tech for the next 5 years. We see QCOM as a top performer in all specs and provide 3 areas that largely prove our investment case in the bottom-up analysis. Currently, the stock is trading at historical P/E of 15, in the lower part of the historical 1-year range of [15, 22]. In comparison, the main competitors by industry are trading at 22-23. Thus, we see it as underrating in that part. Looking at the dividend yield, we see it at 3.9% annualized based on the quarterly dividend of $0.48 with ex-div date tomorrow. We think there is a good chance the company will keep such yield going forward as previously they tried to gradually increase the sum paid, and there is financial capacity for that. The dividend payout ratio is at 70%, which is significantly higher than the historic data but it is still possible to support it. The ROE is at 12%, which is good for reinvestments, as the WACC at around 10%. As we have already said, Qualcomm is the only company on the market with bleeding edge technologies, all the main competitors have either current or already outdated tech. Thus, we would expect the share in the market of Qualcomm to either increase or stay at the same levels. At the moment, main banks forecasting at the consensus level predict an overall 3-year sales decrease while even the upper 70USD estimation is done with flat sales in mind. We believe there is significant positive surprise potential here. Moreover, as the forecasts are conservative, the possibility of negative surprise is low even with weak results. Lastly, the company consists of two basic product groups – chip manufacturing and the patent licensing. Their nature is very different from each other, and the profitability for the last one is significantly higher. Keeping these parts under one hood, limits the number of interested investors, thus limiting the upside potential of the overall market capitalization. The company is experiencing the effect in higher capital costs. Although such situation rarely ends up in the breakup of the company, we think this may be the rare case. Jana Partners, activist hedge fund, invested in the company and recommended it to go with the breakup. Currently, the company is reviewing this possibility and the decision may be out by the end of the year. We think it to be a good time to reform the structure of the company as it might be a good way to mark the bottom point and go up, the share price would certainly affect the decision of the company. Summing up, we would buy the QCOM right now – it is a good investment in either short-term or long-term perspective. The stock is trading significantly below the historical levels; the recent downtrend lasted long enough for significant upside potential to arise.