Apple Stock Rating Lowered To Negative On Qualcomm, Services Concerns

A Wall Street research firm on Monday lowered its rating on Apple stock to negative from neutral on concerns about the company's legal fight with Qualcomm (QCOM) and potential antitrust issues with its services business.

X

 

P

The forensic accounting team at CFRA Research made the change after reviewing Apple's (AAPL) latest 10-Q disclosure document with the U.S. Securities and Exchange Commission. But Apple stock rose 0.7% to close at 208.87 on the stock market today. Intraday, it hit a record high of 210.95.

Based on the filing, Apple is accruing Qualcomm royalties at levels below historic costs, CFRA analyst Nicholas Rodelli said. That has benefited Apple's gross profit margin by 75 basis points since early 2017, Rodelli said in a report.

Apple has withheld its royalties to Qualcomm for six quarters and counting. It won't make payments to Qualcomm until lawsuits over the wireless chipmaker's intellectual property are resolved. But the amount Apple is setting aside for payments presumes it will win a lower royalty rate, Rodelli said.

IBD Newsletters