Qualcomm Inc. (NASDAQ: QCOM) is scheduled to report its fiscal first-quarter financial results Wednesday after the markets close. The consensus estimates from Thomson Reuters call for this chip giant to have $0.90 in earnings per share (EPS) on $5.69 billion in revenue. The same period from the previous year had $1.34 in EPS on $7.10 billion in revenue.
This top technology stock has totally underperformed this past year, but it is still a Wall Street favorite, and many are sticking to their guns, basically saying that trading at current levels — the stock is at 11.4 times estimated 2016 earnings — it may be 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 growth of 3G mobile technologies in emerging markets, like China and India, has had a positive impact on Qualcomm and could be a difference maker going forward. Qualcomm is and has been for years a market leader in the development of 3G CDMA (Code Division Multiple Access) technologies. The company recently developed an LTE chipset that supports SCDMA (Synchronous Code Division Multiple Access) technology. China’s mobile networks run on this, and it could provide the company with a huge leg up in years to come. The company signed numerous big licensing deals recently in China that gave the stock a solid boost.
The company recently announced a joint venture with Japan’s TDK company that will enable delivery of RFFE (radio frequency front-end) modules and RF (radio frequency) filters to fully integrate systems for mobile devices and other fast-growing business segments. According to Qualcomm, the RFFE space is projected to be an $18 billion market by 2020.
A few analysts weighed in on Qualcomm ahead of its earnings:
- Nomura reiterated a Neutral rating and a $55 price target.
- Barclays has a $55 price target.
- Argus has a Buy rating and a $70 price target.
- RBC reiterated a Buy rating.
So far in 2016, Qualcomm has outperformed the market, with the stock only down about 3% year to date. However the stock is down over 30% in just the past 52 weeks.
Shares of Qualcomm were trading at $48.00 on Wednesday, with a consensus analyst price target of $61.83 and a 52-week trading range of $44.39 to $74.09.
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