Jon Hadad

About the Author Jon Hadad

Jon Hadad graduated from the University of Delaware with a degree in political science. Prior to joining the Smarter Analyst team, he was an industry analyst at a New York research firm.

Top Analyst Remains Sidelined on Qualcomm (QCOM) Stock Ahead of Earnings


Following the recent antitrust ruling that sent shares plunging, Qualcomm (QCOM) stock is slowly recovering.

After a string of victories in the courts — which helped propel shares to 52-week high — a negative antitrust  ruling was a major setback for the company sending shares down about 25%. But as things are looking up, investors eagerly await Qualcomm’s next earnings report — due Wednesday — to see if the numbers and commentary back-up the renewed optimism.

Ahead of the print, Deutsche Bank analyst Ross Seymore reiterates a Hold rating on QCOM stock, with an $80 price target, which implies nearly 7% upside from current levels.

As always, we like to give credit where credit is due. According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, Seymore has a yearly average return of 27.5% and a 83% success rate. Seymore is ranked #24 out of 5,249 analysts.

Qualcomm recently came to terms with Apple on a licensing agreement, which is expected to help increase revenue for the length of the deal. While Seymore remains sidelined on the stock, he expects Qualcomm to report a “solid F3Q as Apple’s first quarterly royalty payment in ~2 years drives q/q revenue growth in QTL.” 

While the Apple deal is huge, Seymore says this is “partially offset by ongoing smartphone softness from macro/tariff impacts,” which is forcing the analyst to take a slightly more conservative outlook in his 2H CY19 estimates.

Another major topic that Seymore expects to be focused on is Qualcomm’s legal battles. The analyst says the company has seen “both wins and a setback in recent weeks” in this regard, as it won the Apple case, but lost a major anti-trust ruling. The company is appealing this ruling, and received support from major US agencies, including the DOJ, DOE and Pentagon, on its notion for a partial stay. 

In the long-term, many are bullish on Qualcomm stock because of its 5G leadership. But short-term, Seymore is worried about the “ongoing legal uncertainties and a weak smartphone market,” which are leaving him on the sidelines. Overall, QCOM has 11 bullish analysts in its corner over the last three months, 10 analysts playing it safe on the sidelines , and only one bear who believes Qualcomm is a house of cards that will collapse at any moment. The 12-month average price target of $84.45 showcases nearly 13% in upside potential for the ‘Moderate Buy’ rated stock. (See QCOM’s price targets and analyst ratings on TipRanks).

 

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