tiprankstipranks
Qualcomm Could Skyrocket as Supply Chain Issues Improve
Stock Analysis & Ideas

Qualcomm Could Skyrocket as Supply Chain Issues Improve

Based in San Diego, California, Qualcomm Incorporated (QCOM) is a global leader in developing and commercializing innovative technologies that underpin the global wireless industry and related products and services. These advanced technologies consist of integrated circuits and 3G/4G/5G-based system software.

The company also grants various rights related to the production and sale of its technologies, enabling users to realize 5G standards and develop spin-offs.

Plus, Qualcomm acquires interests in startups working with 5G and artificial intelligence technologies and operating in various industries, such as automotive and consumer electronics. Amid targeted early-stage entities are also developers of cloud computing networks, Internet of Things (IoT), and voice and data communications technologies. I am bullish on this stock. (See Analysts’ Top Stocks on TipRanks)

Qualcomm shares have outperformed the Technology Sector ETF (XLK) in the past two years. Amid Top 5G Stocks, Qualcomm has been the best performing stock since January 2019, returning over 250%.

The stock is healthy and reflects the status of the company. Ongoing supply chain problems will continue to weigh on semiconductors and other industries for some time.

Qualcomm is strong and will ignore these issues, as it has in recent months, so the stock price is expected to remain buoyant. Industry headwinds and other uncertainties will dissipate as the recovery progresses, potentially giving equity gains an additional boost.

Q4 and Fiscal 2021 Earnings Results

The revenue diversification strategy remains key to success, leading the fourth quarter and full-year results for Fiscal 2021. 

For the last quarter of Fiscal 2021, ended September 26, Qualcomm posted adjusted EPS of $2.55 on total revenues of $9.34 billion (up nearly 44% year-over-year). On average, the company beat analysts on adjusted EPS by $0.29 and on revenue by $500 million.

Regarding Fiscal 2021, Qualcomm has achieved many growth targets the company shaped in 2019. Year-over-year, adjusted total revenues were up more than 50% to $33.5 billion, adjusted earnings before tax (EBT) expanded 900 basis points to about 34%, and adjusted EPS more than doubled to $8.54.

Looking Ahead to Q1 of Fiscal 2022

Looking ahead to the first quarter of Fiscal 2022, the company expects revenue between $10 billion and $10.8 billion, compared to the analysts’ average estimate of $10.41 billion.

Adjusted earnings per share are expected to be between $2.90 and $3.10, versus the median estimate of $3.

A Strong Presence in the Digital Landscape

The world is becoming increasingly global in the way people can communicate through wearable devices. In this particular era, the mission of technology is to minimize disturbances when people interact with each other and with objects and for objects that communicate between them.

5G is critical as the technology creates the conditions for faster transfer of larger amounts of data in a unit of time, making any human activity more efficient, even when performed on a small device.

Consumers are increasingly showing their preference for the virtual world and can thus optimize the use of their communication resources. Businesses can take advantage of a wider range of opportunities that arise in this dynamic and global economic system.

As a leading innovator in wireless technology available worldwide and contributing to the expansion of 5G technology, Qualcomm is well-positioned to capitalize on the anticipated surge in demand for the smartphone as this is the place where its technologies are absorbed the most.

To meet the global move to go green, global industries are being asked to gradually ramp up technology, which is the only solution for pollution so far. Qualcomm is actively involved in this modernization process for a more sustainable world, as its technologies are key actors in the transformation scenario.

Dividends

The company pays a quarterly dividend of $0.68 per common share. This grants it a forward dividend of $2.72, giving it an above-average yield of about 1.5% (versus an S&P 500 dividend yield of 1.3%).

Wall Street’s Take

In the past three months, 21 Wall Street analysts have issued a 12-month price target for QCOM. The company has a Moderate Buy consensus rating, based on 12 Buys and nine Holds.

The average Qualcomm price target is $195.33, implying 7.9% upside potential.

Summary

As a development leader and prominent contributor to 5G technology adoption, its share rose despite severe headwinds from supply chain issues. The malfunction will be resolved, after which Qualcomm will get an extra boost that could potentially push the stock price much higher than the current rate.

Disclosure: At the time of publication, Alberto Abaterusso did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates Read full disclaimer >


Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles