Ahead of the Bell: Goldman names Qualcomm top pick

Simona Jankowski and Thomas D. Lee added shares of Qualcomm to the investment bank's "Conviction Buy List" a recommended portfolio, in a note to investors, replacing shares of Cisco Systems Inc.

Jankowski and Lee said they expect Qualcomm to benefit from royalty fees as smartphone makers such as Apple Inc. and Sony Ericsson continue to promote adoption of the gadgets.

In addition, Qualcomm's "superior" chipsets--operating on third-generation wireless networks--should continue to gain market share, the analysts said, while restructuring among Chinese telecoms should add handsomely to Qualcomm's revenue.

The analysts raised their price target on San Diego-based Qualcomm to $56 from $55, implying they expect a return of 16 percent in the next 12 months over Tuesday's Thursday's close at $48.17

Jankowski and Lee said they removed Cisco from their list of top picks because shares have fallen 11 percent since it was added to the list in March. They kept their "Buy" rating on Cisco.

Shares of Qualcomm declined 10 cents to $48.07 in premarket electronic trading, from their close in Thursday's regular session at $48.17, as Wall Street looked headed toward a lower open.

Cisco shares declined 32 cents to $21.81 premarket, from their regular session close at $22.13.