In a research report issued Thursday, Canaccord analyst Michael Walkley reiterated a Buy rating on shares of QUALCOMM, Inc. (NASDAQ:QCOM), while reducing the price target to $65 (from $72), after the company forecast quarterly sales and profit that fell short of estimates.
Walkley commented: “Q1/F16 and guidance was below our expectations due to ongoing licensing collection issues from Chinese OEMs. In fact, we estimate Qualcomm’s results and Q1/F2016 guidance implies it is not collecting on 20% or more of devices that should pay royalties. We also anticipate lower QCT revenue per MSM trends in Q1/F’16 due to stronger share in the highend smartphone market for Apple that uses modem only solutions versus higher-ASP integrated Snapdragon solutions, lower QCT chipset content share in the high-end Samsung Galaxy S6, and overall combined Apple and Samsung high-tier market share gains impacting other high-tier Android OEMs using QCOM’s higher-end Snapdragon solutions.”
“While near-term high-tier smartphone chipset share dynamics negatively impacted F2015 estimates, we anticipate gradually recovering QCT trends during F2016 primarily due to the announced $1.4B cost savings program and improved Snapdragon sales into the high-end given early design win traction for the Snapdragon 820. We maintain our BUY rating but lower our PT to $65 due to our lowered estimates.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael Walkley has a total average return of 18.2% and a 64.3% success rate. Walkley has a 3.5% average return when recommending QCOM, and is ranked #8 out of 3824 analysts.
Out of the 34 analysts polled by TipRanks, 21 rate Qualcomm stock a Buy, 11 rate the stock a Hold and 2 recommend a Sell. With a return potential of 40.0%, the stock’s consensus target price stands at $71.50.