Canaccord analyst Michael Walkley came out with an update on Qualcomm (NASDAQ:QCOM), after the company reported Q1/F2015 results with pro forma EPS of $1.33 above his $1.29 estimate due to strong QCT unit sales. The main story was the Company’s lowered 2H15 QCT guidance due to Samsung opting for its in-house applications processor, ‘Exynos’, over QCOM’s Snapdragon 810 for its upcoming flagship launch (the Galaxy S6).
The analyst maintained a Buy rating on the stock, but slightly reduced his price target to $84 (from $90), which still represents a potential upside of 32% from where the stock is currently trading.
Walkley noted, “Despite the beat and Q2/F2015 guidance above our expectations, Qualcomm lowered F2015 guidance primarily due to stronger share in the high-end smartphone market to Apple that uses modem only solutions versus higher-ASP integrated Snapdragon solutions, lower content share in the high-end Samsung Galaxy S6 due to the Snapdragon 810 not winning anticipated market share, and increased competition from China in part due to performance with chipset for the mid-to-high-tier.”
The analyst added, “With Qualcomm trading at roughly 11.5x or 8x ex-cash our updated F2016 pro forma EPS estimate, we believe the valuation is compelling for longer-term investors.”
QUALCOMM Incorporated designs, develops, manufactures, and markets digital communications products and services in China, South Korea, Taiwan, and the United States.