Some companies can’t wait to put 2020 behind them but at Qualcomm (QCOM) HQ, they might be wishing it never ends.
The semiconductor giant has brushed aside any Covid-19 and macro headwinds, and totally shocked the market after blowing its fiscal fourth-quarter earnings out of the water.
In FQ4, Qualcomm delivered revenue of $6.5 billion, a year-over-year increase of 35.1%, beating the estimates by $560 million. The bottom-line results flew past the Street’s forecast too, with Non-GAAP EPS of $1.45 coming in $0.27 ahead of consensus.
While this earnings season has been characterized by strong results only to be let down by weak guidance, Qualcomm bucked the trend here too.
For FQ1, Qualcomm guided for revenue between $7.8 billion to $8.6 billion, well ahead of Wall Street’s forecast for $7.15 billion. The chipmaker expects adjusted earnings of $1.95 to $2.15 a share, also ahead of the analysts’ forecast for adjusted earnings of $1.66 a share.
As the world’s largest mobile chipmaker, the bull case for Qualcomm is driven by the 5G opportunity. The cycle is only in its first innings and should drive material gains over the next few years as people upgrade their smartphones to 5G enabled handsets. However, looking beyond the next quarter, Qualcomm played it safe. Management warned investors that due to the unusual launch of the iPhone 12 in the December quarter, sales could decline in the following March quarter.
Nevertheless, Rosenblatt analyst Kevin Cassidy calls the results and guide “stunning.” The 5-star analyst added, “We view the 5G evolution as in the very early stages of growth. Qualcomm is the pure play investment for the 5G market.” the 5-star analyst said.
Cassidy reiterated a Buy rating on QCOM while raising the price target from $130 to $155, which implies a 7% upside from current levels. (To watch Cassidy’s track record, click here)
RBC analyst Mitch Steves seems to agree. The 5-star analyst said, “Overall, this was materially better than expected and the focus shifted to the sustainability of the revenue line going forward (given volatility potential in handset units and changes in seasonality driven by COVID-19 disruptions.”
Steves bumped his price target from $106 to $126. However, after this week’s 18% gains, the figure implies possible downside of 13% (To watch Steves’ track record, click here)
Qualcomm has plenty of backing amongst Wall Street analysts. Based on 14 Buys and 7 Holds, the stock has a Moderate Buy consensus rating. Meanwhile, the $154.33 average price target indicates shares will rise ~6% from current levels. (See Qualcomm stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
