Boutique Warms To Apple & Qualcomm (AAPL, QCOM, NVDA)

Collins Stewart has initiated coverage on several key technology stocks this morning.  The boutique firm has come out positive on Apple Inc. (NASDAQ: AAPL) and on Qualcomm (NASDAQ: QCOM), and a little more conservative on shares of NVIDIA (NASDAQ: NVDA).  It noted that the "pie ripening towards Apple" and Qualcomm is positioned for long-term growth.

On Apple Inc. (NASDAQ: AAPL), the firm noted that macro headwindsshould abate toward the second half and that Apple remains in thesweet spot of computer and handset industry trends. Even though the firm sees slower momentum for iPhones, Apple ismost likely to benefit from the turbulence in the PC industry.  Thefirm started coverage with a buy rating and a $117 target based upon18-times earnings of $5.00 plus net cash of $27.00 per share.

On Qualcomm (NASDAQ: QCOM), the report does note a tepid outlook forhandsets where sell-through continues to moderate and where most handsetOEMs exited the year with excess inventory.  It also noted that the softeconomy, saturation and delayed replacement cycles will impact the longterm unit growth rate.  But the firm sees an opportunity to increasemarket share in 2010 despite near term speed bumps. It noted thatQualcomm can displace Texas Instruments at Nokia, increase share atRIMM and target the iPhone, all which bodes well for 2010 and beyond.The firm started coverage with a buy rating and a $45.00 price targetbased upon 19-times earnings of $2.00 plus cash and equivalents of$6.78 per share.

Collis Stewart sees the near-term outlook as cloudy at NVIDIA (NASDAQ:NVDA) as a combination of excess channel inventory and weak end demandwill weigh on results.  It does see a seasonal recovery as new productlaunches will help competitive positioning. Results will likelyimprove by year end and its Netbook opportunity limited.  The firmbelieves that Nvidia will likely stave off competition from AMD/ATI, but at the expense of pricing and profitability.CS started the shares with a hold rating and sees shares range-bound ina $6 to $9 range with no valuation support on earnings but at the lowerend on enterprise value to sales.

Jon C. Ogg
January 7, 2009