UPDATE: Jefferies Reiterates on Qualcomm Despite Concerns

In a report published Friday, Jefferies analyst Peter Misek reiterated a Buy rating on Qualcomm (NASDAQ: QCOM) and reiterated its price target of $80.00

In the report, Jefferies lists three concerns and then states its projections: "1) After the challenges QCOM had in collecting TD-SCDMA royalties, what will change with TD-LTE in China? Due to their lead in developing multi-mode chips, we believe QCOM will be the major supplier of TD-LTE chips next year, which means collecting TD-LTE royalties in 2014 will not be an issue. In 2015 when more competitor TDLTE chips ramp, we think China Mobile and the Chinese government will likely be more supportive than they were for TD-SCDMA. Handset OEMs were reluctant to develop TDSCDMA handsets as they would only work on CM's network and the initial ramp was slow. This also led to higher handset prices. QCOM worked with CM to develop TD-LTE as CM wants to make it a global standard and benefit from economies of scale. We believe the Chinese gov't wants TD-LTE to succeed abroad is it would provide growth opportunities for ZTE/Huawei. Net/net: we think QCOM will receive TD-LTE royalties next year due to its strong chip position and afterward the royalty rate should be fairly stable due to that precedent, multi-mode requirements, and int'l TD-LTE expansion. 2) Competitors launching integrated baseband/WLAN solutions? We believe that QCOM's baseband lead and integrated baseband/WLAN lead insulates them until at least 2015 not just in basebands but in integrated baseband/WLAN as well. 3) How sustainable is QCOM's royalty rate with VoLTE (i.e., single-mode LTE) coming? QCOM's standard rate for LTE-only is 3.25% vs. 4%-5% for 3G CDMA. We expect QCOM's implied royalty rate to remain steady at 3.3% in FY14 and for only a few singlemode LTE handsets to launch in 2014. We expect minimal impact to the implied royalty rate until 2016 and see downside risk to 2.8% as possible but unlikely to be attained for 10+ years due to the prevalence of multi-mode 3G/4G networks until then. ("The LTE Wave; Initiate QCOM at Buy")"

Qualcomm closed on Friday at $71.22.