Qualcomm, the maker of mobile processors and 5G wireless chipsets, is expected to announce its fiscal-third-quarter earnings after the market close. However, the company may provide a muted forecast due to the soft global smartphone demand.
The Wall Street consensus estimates forecast Qualcomm to report revenue of $8.5 billion for the June quarter, with adjusted earnings per share of $1.81. Analysts also predict earnings per share of $1.92 on revenue of $8.7 billion for the current quarter.
Research firm Canalys recently revealed that worldwide shipments for mobile phones fell by 10% year-over-year in the second quarter. In addition, Taiwan Semiconductor Manufacturing (TSM) stated last month that the smartphone market had experienced a decline over the past three months.
Given Qualcomm’s significant presence in the mobile market, it may face challenges in delivering strong results in the coming months.
Bernstein analyst Stacy Rasgon, while reiterating his Outperform rating on Qualcomm stock and maintaining his $135 price target, acknowledged that Qualcomm’s end-market has yet to rebound. He stated that smartphones remain weak and estimated Qualcomm’s September-quarter revenue to be $8.5 billion, which is below the current consensus.
Despite uncertainties surrounding the business, Rasgon believes that Qualcomm’s stock, with its low valuation, could be an attractive option if the market eventually recovers.
Over the past 12 months, Qualcomm shares have declined by about 11%, in contrast to the 30% rise of the iShares Semiconductor exchange-traded fund (SOXX), which tracks the ICE Semiconductor Index.
