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Qualcomm Registers Solid Q3, but Macroeconomic Headwinds to Hurt Q4

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Despite reporting strong quarterly results, QCOM stock fell in Wednesday’s extended trade.

Qualcomm, Inc. (NASDAQ: QCOM) has reported outstanding results for the fiscal third quarter (ended June 26, 2022). Adjusted earnings rose 54% year-over-year to $2.96 per share, beating the consensus estimate of $2.89 per share. The figure also surpassed the high end of the California-based company’s guidance range. Meanwhile, the company has lowered its fourth-quarter outlook considering the impact of macroeconomic headwinds.

Revenues grew 36% year-over-year to almost $11 billion, driven by a 45% rise in the QCT (Qualcomm CDMA Technologies) segment’s revenues, which stood at $9.4 billion. Revenues of the QTL (Qualcomm Technology Licensing) segment jumped 2% to $1.5 billion.

The President and CEO of Qualcomm, Cristiano Amon, said, “We are pleased to report strong quarterly results, with record QCT Automotive and IoT (Internet of Things) revenues in a challenging macroeconomic environment.”

“We are also excited to announce the extension of our patent license agreement with Samsung and the expansion of our strategic partnership to deliver leading premium consumer experiences for Samsung Galaxy devices,” he added.

Qualcomm Lowers Its Q4 Outlook

For the fiscal fourth quarter, the wireless technology provider expects adjusted EPS to range from $3 to $3.30. This includes a reduction of $0.20 per share related to the impact of macroeconomic headwinds as well as lower-than-expected demand for handsets across the world.

Total revenues are expected between $11 billion and $11.8 billion. QCT revenues are projected to come in the range of $9.5 billion to $10.1 billion, and QLT revenues are anticipated between $1.45 billion and $1.65 billion.

Analysts’ Take on Qualcomm’s Q3 Performance

After the results were announced, Mizuho Securities analyst Vijay Rakesh maintained a Buy rating on the stock and raised the price target to $175 from $168 (14.1% upside potential).

Rakesh said, “We believe QCOM remains well-positioned with 1) expanded Samsung agreement, 2) increased Samsung Galaxy Smartphone share into 2023E, 3) traction in Automotive ADAS and RF, and 4) potential continuing 5G iPhone modem into 2023E.”

Overall, the stock has a Strong Buy consensus rating based on 10 Buys and one Hold. QCOM’s average price target of $197.33 implies 28.6% upside potential.

Bloggers Like Qualcomm

TipRanks data shows that financial bloggers are 91% Bullish on QCOM, compared to the sector average of 65%.

Market’s Reaction to Qualcomm’s Q3 Results

QCOM stock closed 2.3% up on Wednesday in anticipation of the company’s quarterly results, which were slated to be released after hours. However, even after putting up a strong show in the third quarter, the stock dropped 3.7% in the extended trading session, due to the impact of the economic downturn on Qualcomm’s guidance.

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