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What To Make Of Qualcomm's 'Mixed Bag'

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What To Make Of Qualcomm's 'Mixed Bag'
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QUALCOMM, Inc. (NASDAQ: QCOM) announced better-than-expected F2Q results, with sales of $5.54 billion and EPS of $1.04. Pacific Crest’s Michael McConnell maintained an Overweight rating for the company, while reducing the price target from $63 to $61.

The upside in Qualcomm’s revenues was driven by the robust performance in both the QTL, its chipset business, and QCT, the licensing businesses, analyst Michael McConnell said.

Related Link: Intel: What Everyone On The Street Thinks

Mixed FQ3 Guidance

Qualcomm issued a mixed guidance for FQ3. The company lowered its TDS outlook for 2016, citing weaker smartphone demand, but maintained its FY16 QTL revenue guidance of $7.3B-$8.0B. McConnell believes that Qualcomm will need to sign new agreements with Oppo and BBK, which are expected to contribute a larger portion 2Q catchup payments to achieve this guidance.

Qualcomm guided to FQ3 revenues of $5.6 billion, with weaker implied QTL guidance offset by stronger QCT sales, driven by a richer ASP mix. The company has guided to non-GAAP EPS of $0.95 at the midpoint.

McConnell expects Qualcomm to lose 20-30 percent share of baseband chips in the new iPhone to Intel Corporation (NASDAQ: INTC). The net EPS estimates for F2016 and F2017 have been reduced from $4.05 to $4.0.3 and from $4.70 to $4.63, respectively.

Latest Ratings for QCOM

DateFirmActionFromTo
Apr 2017RosenblattDowngradesNeutral
Mar 2017MacquarieInitiates Coverage OnNeutral
Jan 2017CLSADowngradesBuyUnderperform

View More Analyst Ratings for QCOM
View the Latest Analyst Ratings

Posted-In: Michael McConnell Pacific CrestAnalyst Color Long Ideas Price Target Reiteration Analyst Ratings Trading Ideas Best of Benzinga

 

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