Wall Street braced for a bumpy move as Qualcomm Inc. weathered a glut of smartphone chips, but the chipmaker’s shares were still higher on Thursday after a disappointing holiday forecast.
Shares fell a whopping 9.4% Thursday morning to $101.93, the lowest price for the company’s shares since July 2020. The channel has up to 10 weeks of inventory, and its record handset sales are expected to be followed by a shortfall of at most $2 billion in the current quarter.compared to the Wall Street consensus at the time.
“It’s likely that the weak market, and even the potential destocking, wasn’t completely unexpected,” Bernstein analyst Stacey Razgon said. Possibly worse than thought (but not limited to Qualcomm, virtually all cell phone-exposed players show similar dynamics.”)
Razgon lowered his price target to $140 from $165, noting that executive collars suggest Qualcomm will keep Apple’s AAPL.
An important note as business, t at least until the next iPhone cycleiPhone makers are about to start building their own wireless components..
More than half of Qualcomm’s analysts lowered their price targets in response to the report, according to a FactSet follow-up. Evercore ISI analyst CJ Muse lowered his target to $120 from $130 while maintaining the inline valuation. He said while Qualcomm geared up for failure, Same as last quarterthe actual reading was much worse than expected.
“The buy side was clearly prepared for a mistake, but December Q’s magnitude was clearly much worse than expected, with earnings/EPS 20%/32% below consensus,” Muse said.
“Management has noted weak demand here (CY22 mobile phones are now expected to decline in the low double digits versus a mid-single digit percentage decline previously. , including the premium tier) and rising channel inventories (currently 8-10 weeks of oversupply), which are the main sources of weakness,” Evercore analysts noted.
Of the 32 analysts that cover Qualcomm, 20 have a Bigrade rating and 12 have a Hold rating. Nineteen of the 32 analysts lowered their price targets, according to FactSet data, with an average target price of $153.75, down from $172.71 previously.
Qualcomm’s stock has fallen more than 42% so far this year, matching a 41.2% drop in the PHLX Semiconductor Index SOX.
However, it is well above the S&P 500 index SPX’s year-to-date decline of 21.1%.