Analysts: Qualcomm's Good Results Don't Hide Smartphone Uncertainty

QUALCOMM, Inc. QCOM reported first-quarter 2016 results Wednesday, reporting $5.8 billion in non-GAAP revenue and $0.97 diluted EPS.

The company beat an anticipated $5.36 billion revenue and $0.96 EPS. Shareholders saw $2 billion in buybacks and $717 million in dividends.

The company decreased its second-quarter guidance by around 30 percent to $0.90 to $1.00, below expectations of $1.01.

"We delivered a stronger than expected quarter, driven by better than expected 3G/4G reported device sales and cost [reduction initiatives] across the company,” said CEO Steve Mollenkopf.

J.P. Morgan

J.P. Morgan analysts rated the company "overweight," and expressed concerns that Qualcomm's positive results wouldn't be able to outperform a slumping smartphone market. "[Higher-than-expected revenue and margins] was offset by weaker-than-expected QTL revenue likely related to both smartphone market weakness and ongoing under-reporting in China," they wrote.

Brean

Brean Capital also saw mixed results, noting that the company's adjusted second-quarter guidance and legal issues from a royalty dispute with LG  indicate that the company might expect a slowdown in the coming quarter. Brean lowered its price target to $60.

"We believe QCOM shares discount much of the current market dynamics and its legal challenges, and we see a significant opportunity for the company to regain lost share and margins," analyst Mike Burton wrote.

FBR

FBR maintained a price target of $56 and a "buy" rating, claiming that "we think QCOM remains the gold standard in today’s cellular technology." However, the firm noted that the "mobile innovation treadmill" had slowed, which might indicate that future smartphone market growth rates will decline.

Qualcomm was up 2 percent in mid-morning trading Friday.