Qualcomm (NASDAQ:QCOM)
Wells Fargo downgraded the semiconductor giant Qualcomm (NASDAQ:QCOM), noting the general weakness in the area and the company’s “high” exposure to smartphones. This caused Qualcomm stock to drop by slightly more than two percent in premarket trading on Monday.
Analyst Gary Mobley changed his rating from equal-weight to underweight. However, the business maintained its price target of $105 per share. He said that the change in rating is “consistent” with earlier downgrades to Qorvo (QRVO) and Skyworks Solutions (SWKS), both of which are strongly connected to smartphones. However, he did not adjust the firm’s price objective from $105 per share.
According to a note that Mobley wrote for clients, “if market sentiment toward the chip industry becomes more favorable, or once investors are certain we’ve passed a trough in the chip cycle, we think shares of businesses with substantial smartphone exposure should underperform the wider chip sector.”
Mobley said that specifically about Qualcomm stock, shares are expected to maintain trading at a discount to peers because investors are likely to give a lower earnings multiple to firms that have exposure to the “no-growth” mobile handset industry. This is because investors will likely assign a lower earnings multiple to companies exposed to the “no-growth” mobile handset sector. Specifically, investors are likely to assign a lower.
Mobley also said that investors might begin to evaluate Qualcomm (QCOM) based on its ability to generate profits per share, omitting its modem and RF front-end sales to Apple (AAPL) since it is thought that these shipments would continue to decrease over time.
At the Snapdragon summit in December, Qualcomm (QCOM) unveiled Snapdragon AR2 Gen 1, its first augmented reality platform designed specifically for wearable glasses.
The majority of analysts have a positive outlook on Qualcomm stock. Seeking Alpha contributors have given it a BUY rating, and analysts on Wall Street have given it a BUY rating. On the other hand, Seeking Alpha’s quantitative approach, which often outperforms the market, assigns a HOLD rating to QCOM.
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Author Shariq Khan 
