Qualcomm Inc (NASDAQ:QCOM) experienced a significant drop in its share price during early trading on Thursday, following the announcement of weaker guidance. The company’s latest earnings release garnered attention from analysts, with various takeaways worth noting.
Susquehanna’s analyst, Christopher Rolland, maintained a Positive rating on the stock while raising the price target from $140 to $155. He acknowledged that Qualcomm’s results and guidance were disappointing due to soft handset demand, macro headwinds, and channel inventory drain. However, he expressed optimism that the worst might be behind them, and CEO Cristiano Amon’s efforts to diversify the company’s offerings into various sectors, such as RF, Auto, IoT, and edge AI, were showing promising signs.
KeyBanc Capital Markets’ analyst, John Vinh, reiterated an Overweight rating and a price target of $145. He pointed out that smartphone demand was negatively impacted by slower recovery in China and weak trends in emerging markets, while developed markets remained stable. He also highlighted Qualcomm’s plans for additional operational expense reductions and the challenges posed by Huawei/HiSilicon in the latter half of 2023.
Canaccord Genuity Capital Markets’ analyst, Michael Walkley, reaffirmed a Buy rating and a price target of $152. He assessed Qualcomm’s quarterly results as essentially in-line, considering the gradual movement of global inventory through the channel. Walkley acknowledged that the challenging macro environment, with soft smartphone trends and slowing IoT demand, might continue to impact Qualcomm’s near-term performance.
Oppenheimer’s analyst, Rick Schafer, maintained a Perform rating on the stock. He observed that Qualcomm’s results were mixed, with revenues slightly missing estimates but an earnings beat attributed to cost controls. Schafer noted persistent weakness in the handset segment, accounting for about 75% of sales, and a more muted recovery outlook compared to peers. He also mentioned that channel inventory remains a lingering concern until the year-end.
Raymond James’ analyst, Srini Pajjuri, reiterated a Market Perform rating on the stock. He highlighted that management did not provide an update on the modem supply agreement with Apple Inc (NASDAQ:AAPL), which is set to expire in the latter half of 2024. Pajjuri expressed uncertainty regarding potential catalysts for the stock, apart from a possible extension of the supply agreement with Apple, which would likely be temporary.
As of the time of publication on Thursday, shares of Qualcomm were down 9.8% to $116.53, reflecting the market’s reaction to the company’s latest earnings release and guidance.