Qualcomm (NASDAQ:QCOM) provided a disappointing outlook for the third quarter of Fiscal Year 2023. The chipmaker’s guidance reflects a weakness in smartphone chip demand. Also, the company expects the business to remain dull in the next couple of quarters. Following the news, QCOM stock dropped 6.5% in yesterday’s extended trade.
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The company said that an uncertain economy, persistent inflation, and China’s slower economic recovery continue to impact demand. As a result, Qualcomm anticipates global production of 3G, 4G, and 5G handsets in 2023 to decline by a high single-digit percentage in comparison to last year.
Further, it guided for a “larger-than-normal” sequential fall in fiscal Q3 revenues for the QCT (Qualcomm CDMA Technologies) unit to $6.9 billion to $7.5 billion. The division includes mobile-phone chipsets and other mobile device products. It’s important to note that Qualcomm’s forecast does not account for predictions of a recovery in Chinese demand in the second half of 2023.
At its earnings release yesterday, the company provided an overall disappointing picture for the Q1 quarter. Qualcomm expects revenue between $8.1 billion and $8.9 billion, down from the $9.12 billion expected by analysts. Also, the EPS-guided range of $1.70 to $1.90 missed analysts’ estimates of $2.13.
Is Qualcomm a Good Buy Now?
Currently, Wall Street is cautiously optimistic about QCOM stock. It has a Moderate Buy consensus rating based on two Buy and two Hold recommendations. The average stock price target of $140 implies an upside potential of 24.1%.
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