tiprankstipranks
Qualcomm: Tailwinds in Place for a Strong 2H21
Stock Analysis & Ideas

Qualcomm: Tailwinds in Place for a Strong 2H21

Qualcomm (QCOM) swatted away any talk of the global chip shortage impacting its business in the June quarter, as earnings more than doubled in FQ3. The company reported adjusted earnings of $1.92, compared to 86 cents a share in the same period last year.

The bottom-line result exceeded the Street’s expectations by $0.24. There was also a beat on the top-line; revenue came in at $8.06 billion, a 64.5% year-over-year uptick and $500 million above the consensus estimate.

Looking ahead, the company also expects the business to keep on outperforming.

Qualcomm expects FQ4 revenue to come in between $8.4 billion and $9.2 billion and non-GAAP EPS in the $2.15-$2.35 range. At the mid-point, both are above the respective $8.54 billion and $2.07 consensus estimates. While Deutsche Bank’s Ross Seymore applauds the results and outlook, it’s the nature of the performance which the 5-star analyst finds most eye-catching.

“We view the quality of this beat/raise to be even more impressive than the quantity as highlighted by the diversity of growth within QCT (RFFE, Automotive and IoT now ~40% of total QCT rev and growing 1.6x faster than Handsets revenue y/y) as well as the improvement in profitability (GM +0.7% q/q despite QCT mix rising and QCT EBT +2.5% q/q),” Seymore said.

As the iPhone 13 will launch in Q3, with “better than expected units and a growing mmWave mix,” and demand can also be catered for with additional wafer supply, the second half of the year has a “number of strong tailwinds” to propel the shares forward.

Add in the “continued margin improvement,” and Seymore anticipates these dynamics “to yield meaningful upside to both the company’s revs/ EPS and share price.” As such, the analyst raised the FY21 EPS estimate from $7.79 to $8.29.

Seymore also thinks Qualcomm is better positioned than its semiconductor peers, as the analyst believes the majority of other names in the SOX “face increasing cyclical headwinds.”

To this end, there’s no change to Seymore’s rating, which remains a Buy, or price target, which stays put at $290. Investors are looking at gains of 33% from current levels. (To watch Seymore’s track record, click here)

There’s mostly agreement amongst Wall Street analysts on where this stock is heading. Barring 2 Holds, all 10 other recent reviews say Buy. Accordingly, QCOM boasts a Strong Buy consensus rating, backed by a $181.86 price target. The implication from investors? Upside potential of 28%. (See Qualcomm stock analysis on TipRanks)

To find good ideas for tech stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Trending

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

Popular Articles