Qualcomm Stock (NASDAQ:QCOM)
The semiconductor manufacturer Qualcomm (NASDAQ:QCOM) announced mixed earnings and an in-line outlook for its fiscal first quarter on Friday, sending its stock price down by around 2.5% in early trade.
Qualcomm (NASDAQ:QCOM) had a “little confession” this quarter that was probably better than expected, according to Susquehanna analyst Christopher Rolland, who has a neutral recommendation on the stock.
Although phone revenue was negatively affected in the December quarter, the segment was constructively forecasted flat into March as they anticipate a reduction in units and an increase in average selling price (i.e., as Apple mixed down in March).
The weak smartphone market and increased inventories, he said, had an adverse effect on the company’s technology licensing results and guidance as well. However, the company’s diversification strategy is paying off, with automotive and the internet of things now accounting for 27% of total revenue.
Short-term, this is a blow for Qualcomm, according to Rolland. Still, CEO Cristiano Amon “is demonstrating Qualcomm can… become a genuine broad-based semiconductor giant, expanding into RF, Auto, IoT and beyond.”
Qualcomm predicts $8.7 billion to $9.5 billion in sales for the second quarter of 2018, with the QCT division contributing between $7.4 billion and $8 billion. In addition, the company anticipates an adjusted profit per share of $2.05 to $2.25.
Qualcomm (NASDAQ:QCOM) is projected to bring in $9.41B in sales and $2.24 in profits per share this year.
Stacy Rasgon, a Bernstein analyst who covers Qualcomm stock and has an outperform rating and a $155 price target per share, has said that the business is now being hurt by a sluggish market and excessive channel inventories but that the stock is “extremely low.”
When things settle down, and Apple (NASDAQ:AAPL) keeps doing business, “the set-up until 2024 looks strong,” Rasgon said.
Following the report’s release, Bank of America analyst Tal Liani reaffirmed his buy recommendation on Qualcomm, citing several near-term positives for the company’s stock.
With China perhaps rebounding in the second half of the year and inventory drawdowns depleting channel stockpiles, greater near-term demand is expected to materialize, as indicated by Liani.
The analyst also noted the company’s diversification outside smartphones and the improvement in QCT margins in the year’s second half.
Gary Mobley, an analyst at Wells Fargo, had a less optimistic assessment of the report and outlook, writing that the Qualcomm stock is expected to be a “relative underperformer” even if the semiconductor market improves.
This month, Qualcomm stock was named as one of Mizuho Securities’ 2023 top picks in the semiconductor industry.
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