Stock Analysis & Ideas

Qualcomm (NASDAQ:QCOM) Looks Promising Ahead of Its Q4-2022 Results

Story Highlights

Chipmaker Qualcomm is set to announce its fourth quarter of Fiscal 2022 results on November 2. Wall Street is moderately optimistic ahead of the print and strong trends indicating a decent quarter are also present.

Qualcomm Incorporated (NASDAQ:QCOM) is scheduled to report its fourth-quarter Fiscal 2022 results after the market closes on November 2. Wall Street estimates the wireless communications giant to report non-GAAP earnings per share (EPS) of $3.13, which is almost 23% more than the prior-year quarter’s EPS. Moreover, revenue expectations of $11.38 billion are also around 22% higher year-over-year. Let us see how Qualcomm stands to meet these expectations ahead of the print.

In the last earnings call, Qualcomm had guided GAAP revenues of $11.0 billion – $11.8 billion and non-GAAP earnings of $3.00-$3.30 per share for Q4.

The top line is likely to have benefited from several significant deals that were closed in Q4. For instance, Qualcomm’s long-standing partnership with Meta (NASDAQ:META) was extended to create customized processors for Meta’s Quest virtual reality headsets. Moreover, Qualcomm and GlobalFoundries (NASDAQ:GFS) inked a deal to develop advanced 5G high-speed RF (radio frequency) front-end products.

Interestingly, in September, QCOM announced that its automotive design-win pipeline rose to $30 billion thanks to the growing adoption of Snapdragon Digital Chassis solutions across the auto industry. This is expected to reflect in its quarterly performance too.

Is QCOM Stock a Buy or Sell?

Ahead of the print, HSBC analyst Frank Lee initiated coverage of QCOM stock with a Buy rating and $180 price target, believing the company to have the most complete technology, particularly in modems and RF chips. This portfolio should help Qualcomm expand in the automotive and connected devices, which will also hedge the company against the slowdown in the smartphone segment.

Also, QCOM stock is not expensive by any stretch, with the company’s 9.4x forward price-to-earnings (P/E) multiple being almost 48% below its five-year average. The stock is also trading at a 49% discount relative to the sector’s median P/E. This makes Qualcomm stock a potentially attractive Buy.

Moreover, Wall Street is also moderately bullish on the stock, with a Moderate Buy consensus rating based on nine Buys and four Holds. The average price target for the stock stands at $166.33, indicating 40.5% upside potential.

Conclusion: Many Upsides to Beat Expectations

Qualcomm has posted earnings beats over the past three years, making a beat all the more likely this time as well. Moreover, the trends are also pointing to another strong quarter.

Disclosure

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