As Wall Street is well into the new earnings season, analysts and investors alike are anticipating quarterly results from their favorite companies. What should investors look for in Qualcomm, Inc. (NASDAQ:QCOM) and American Airlines Group Inc (NASDAQ:AAL)?
Qualcomm is set to announce its third fiscal quarter 2015 earnings results on Wednesday, July 22 after market close. Wall Street expects the semiconductor company to post earnings of $0.95 per share and $5.85 billion in revenue, down from $1.44 earnings per share and $6.81 billion in revenue from the same quarter a year prior.
As Qualcomm has fallen approximately 16% year-to-date, it’s important to note that semiconductor stocks have been struggling this year as DRAM chip prices keep fluctuating and PC demand continues to plummet. Year-to-date, the Market Vectors Semiconductor ETF (SMH) has sunk nearly 2%, as compared to a 30% rise in 2014.
Qualcomm is one of many company’s affected by the crumbling Chinese economy. Qualcomm is now facing significant difficulties collecting licensing royalties in China and has accused various vendors of underreporting device sales within the region. Additionally, the company has been facing headwinds from a slowing handset market, increasing pricing pressure in its core handset processor markets, and in-sourcing of handset processors at OEMS.
Qualcomm’s operating profit fell 2% in the first two quarters of the fiscal year after Samsung Electronics opted out of using the company’s applications processor in its new Galaxy S6 smartphone due to issues with the “Snapdragon 810” part overheating during Samsung tests. On a positive note, Samsung is considering partnering back up with Qualcomm with its next-generating flagship, the Galaxy S7. Analysts believe that if Snapdragon 820 ends up outperforming Samsung’s Exynos chips, Samsung will come back to Qualcomm as a partner in order to offer the highest standard available on the market.
Out of 14 analysts polled by TipRanks, 8 are bullish on Qualcomm, 5 are neutral, and 1 is bearish. The 12-month average price target for Qualcomm is $77.30, marking a 20.14% potential upside from where the stock is currently trading. On average, the all-analyst consensus for Qualcomm is Hold.
American Airlines Group Inc
American Airlines is slated to announce second fiscal quarter 2015 earnings on Friday, July 24 before market open. Wall Street expects the airline to post earnings of $2.59 per share and $10.86 billion in revenue, up from $1.99 earnings per share but down from $11.36 million in revenue from the same quarter a year prior.
American Airlines impressed investors and analysts alike in Q1:15 when the company beat EPS estimates by 1.53%.
American Airlines has been progressively growing its flight operations in an effort to raise unit revenue, most recently announcing plans to launch eight new flight services to Venezuela, Mexico, Latin America, and the Caribbean. Additionally, the company has also been working to add more aircrafts to its existing 964 operating commercial aircrafts.
The company recently released its June traffic report, in which the company lowered its passenger capacity forecast for the year from a 2% increase to a 1% increase.
Out of 9 analysts polled by TipRanks, 4 analysts are bullish on American Airlines and 5 are neutral. The average 12-month price target for American Airlines is $55.93, marking a 35.1% potential upside from where the stock is currently trading. On average, the all analyst consensus for American Airlines is Hold.