Qualcomm, Inc. (QCOM) broke out to the highest level since December 2014, surging 4.4% to re $74.95 per share in New York.
The shares jumped after the company announced an accelerated buyback program with major banks.
The 16 billion share buyback program, which is step towards a projected $30 billion total buyback, will include repurchase agreements that have been reached with Bank of America Corp (BAC) , Citigroup Inc (C) , and Morgan Stanley (MS).
"they're buying back one third of the company today," Stacy Rasgon, senior analyst at Sanford Bernstein told Real Money, noting that excitement and a share price gain is almost certainly being driven by this news.
Qualcomm reached a price of $74.94 at 12:50 p.m. in New York.
"[Qualcomm is] buying back one third of the company today," Stacy Rasgon, senior analyst at Sanford Bernstein told Real Money, noting that excitement and a share price gain is almost certainly being driven by this news.
The company's aggressive buyback program after the failure of its acquisition of NXP Semiconductors (NXPI) has been a boon for investors so far, as it has paradoxically risen almost 15% since the announcement of the deal' stalling.
He noted that he believes that analysts and bullish investors are pricing in a recovery of terms with Apple, inc. (AAPL) , with whom Qualcomm has had a long legal battle stemming from disagreements on patents and royalties on products.
Analysts at Barclays and Cannacord Genuity have expressed their optimism that a resolution will be reached in the matter due to litigation fatigue and the improved competitiveness of each company as partners.
Further, Qualcomm's displayed ability to settle such disputes, as they have with Huawei, is stoking the analysts bullishness on the stock.
Both are issuing buy ratings on the stock, with Barclays issuing a price target of $95 per share and Cannacord Genuity eyeing $81 per share.
To be sure, Rasgon was not so sure that a resolution is certain and added that there are a number of hurdles left to clear.
He pointed to hearings on Qualcomm's injunctions against Apple due to be heard in Germany, China, and southern California courts as well.
A hearing before the International Trade Commission on the matter was slated to take place tomorrow, but due to a judge's retirement the hearing has been tabled to September 28.
With proceedings continuing, Rasgon is reticent to price such a bullish factor into his estimates.
As such, he is maintaining his market perform rating and a $65 price target for the stock.
In the meantime, the bulls have the day as the market seems unconcerned about any legal snags and is pushing the stock to its highest levels in years and is outpacing the more moderate price targets by over 10%.