Qualcomm Inc.’s stock will look to snap a streak of five straight post-earnings declines when the chip maker posts fiscal fourth-quarter results Wednesday afternoon.
Investors will be watching Qualcomm’s
QCOM,
results for a read on the smartphone market as the company has been weighed down by sluggish trends there recently.
Could the stock start paying off for investors? “On a cyclical basis,
smartphones look like we are at the bottom, and the company has been flushing out channel inventory for a year,” Bernstein analyst Stacy Rasgon wrote recently, while cheering the company’s product portfolio and edge artificial-intelligence story.
Here’s what else to look out for in the coming September-quarter report:
What to expect
Earnings: The FactSet consensus calls for $1.91 in adjusted earnings per share for the fiscal fourth quarter, down from $3.13 a year before.
Revenue: Analysts tracked by FactSet are modeling $8.5 billion in September-quarter revenue, down from $11.4 billion in revenue a year prior.
Stock movement: Shares of Qualcomm have declined following each of the company’s past five earnings reports, and they saw a 8.2% drop after the most recent one. The stock has ticked about 1% lower over the course of 2023 to date, as the S&P 500
SPX
has increased roughly 9%.
What analysts are saying
- “In the near term, smartphones are still not great but may have bottomed, flattish [year over year in the September quarter] and grew ~14% [sequentially], above seasonal, hence we would not be surprised to see a bit of upside into year-end. But given potential Samsung share losses in next year’s Galaxy models Street estimates into [the March quarter] look high to us, suggesting investors may need to gird themselves at least once more.” — Bernstein analyst Stacy Rasgon
- “[T]he magnitude and sustainability of overall smartphone demand recovery remain uncertain. Nevertheless, smartphone demand pickup could be a tailwind for Qualcomm as we continue to expect Qualcomm to gain share not only in high-end smartphones, but also in mid-segment smartphones” — HSBC analyst Frank Lee
- “We believe QCOM can post a slight EPS beat & raise despite consternation around loss of Huawei, [Internet of Things] softness, and decelerating [year-over-year] auto growth. We also note positives vis-à-vis the impending end to a multi-quarter downstream Handset inventory correction,…upcoming cost actions, and AAPL modem re-up. This is not a bullish call on handset units, but at this stage in the cycle we believe [the] risk/reward for QCOM is favorable.” — Evercore ISI analyst Matthew Prisco
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