Qualcomm Incorporated (QCOM) reported better-than-expected fiscal 2Q results driven by continued high global demand for smartphones.
Adjusted earnings more than doubled to $1.90 per share in 2Q, easily beating Street estimates of $1.67 per share. Notably, EPS results outpaced the company’s guidance range of $1.55-$1.75 per share.
Total revenues grew 52% year-over-year to $7.93 billion in 2Q and surpassed the consensus estimate of $7.62 billion. Revenues at the QCT segment came in at $6.3 billion, up 53% year-over-year, fueled by double-digit growth in handsets, RF front-end, automotive, and IoT products. Additionally, the QTL segment recorded revenues of $1.6 billion, up 51%.
Qualcomm CEO Steve Mollenkopf said, “Looking ahead, Qualcomm is well positioned for continued growth, and we remain confident in our ability to execute on the many opportunities in front of us.”
For fiscal 3Q, total revenue is anticipated to be in the range of $7.1 billion to $7.9 billion versus analysts’ estimates of $7.11 billion. Adjusted EPS is expected to be between $1.55 and $1.75, versus the consensus estimate of $1.52. (See Qualcomm stock analysis on TipRanks)
Following the fiscal 2Q results, Oppenheimer analyst Rick Schafer maintained a Hold rating on the stock.
“Despite a rebound in the smartphone market,” Schafer foresees “risk from an increasingly competitive handset backend (captive/merchant) pressuring ASP and share.”
Furthermore, he views “RF incumbents better positioned w/flagship smartphone OEMs and MTK better positioned to gain share in China/EM backend.” Therefore, Schafer prefers to be on the sidelines.
Wall Street analysts are cautiously optimistic about the stock. The Moderate Buy consensus rating breaks down into 8 Buy ratings, 7 Hold ratings, and 1 Sell rating. The average analyst price target stands at $168.54 and implies upside potential of 19% to current levels. That’s after shares jumped 73% over the past year.
Qualcomm scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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