What to Expect From Qualcomm Earnings

Qualcomm Inc. (NASDAQ: QCOM) will report its fiscal second-quarter financial results Wednesday after the markets close. Thomson Reuters has consensus estimates of $1.33 in earnings per share (EPS) and $6.83 billion in revenue. In the same quarter of the previous year, the company posted EPS of $1.31 and revenue of $6.37.

Qualcomm got absolutely blasted in January when it reported solid earnings numbers that beat estimates but lowered its full-year earnings and revenue forecasts as it lowered the sales outlook for its semiconductor business. That was not what analysts were expecting.

The stock is a Wall Street favorite, and many are sticking to their guns, basically saying that trading at current levels, the stock is at 13.8 times estimated 2015 earnings, and it is a tremendous long-term value. Qualcomm is a quality tech company with recurring royalty revenue and a strong footprint, so patient investors may fare very well. The company may be able to avoid its current activist pressure, if the stock trading was an indication.

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The company managed to maintain its share price in 2014, finishing the year just 0.72% higher. Year to date, shares are down 7.2%. The company has had issues around its guidance, but now a couple of fresh issues are facing the mobile chip giant. Qualcomm appears to have lost another chip order unexpectedly, and a Wall Street analyst has downgraded the company’s stock.

Samsung had already given bad news to Qualcomm in a choice of its chips for the new Galaxy S6 smartphone rather than the Snapdragon. The second hit has come from Chipworks, a consulting firm that identifies which chips and components are inside disassembled mobile devices. The list of chips does not include Qualcomm, despite it having been rumored that the wireless modem chip was going to be in the handset.

A couple of analysts made some mixed calls on Qualcomm ahead of earnings:

• Bank of America upgraded the company to a Buy rating from Neutral and set its price target at $80, implying an upside of % from current prices.
• FBR downgraded Qualcomm to a Market Perform rating from Outperform and lowered the price target to $72 from $80.

Shares of Qualcomm were up 0.6% at $69.00 ahead of earnings on Wednesday. The stock has a consensus analyst price target of $76.50 and a 52-week trading range of $62.26 to $81.97.

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