Qualcomm Stock Drops After Analysts Lower Price Targets, Despite Strong Demand from Apple and Samsung
Qualcomm Inc. (NASDAQ:QCOM) stock was trading lower on Thursday as analysts examined the tech company’s quarterly earnings results.
- Rosenblatt analyst Kevin Cassidy maintained Qualcomm with a Buy with a $225 price target.
- Benchmark analyst Cody Acree reiterated Qualcomm with a Buy and lowered the price target from $240 to $200.
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Rosenblatt: Qualcomm delivered second-quarter revenue and EPS of $10.84 billion (+15% Y/Y) and $2.85 (+17% Y/Y), slightly above the midpoint of guidance ($10.3 billion-$11.2 billion). It beat the consensus at $10.6 billion and $2.82, as well as Cassidy’s estimate of $10.55 billion and $2.80. Management attributed the beat to broad-based strength across all QCT (Qualcomm CDMA Technologies) segments, Handsets, IoT, and Automotive, and emphasized disciplined cost control.
QCT revenue rose 18% Y/Y to $9.5 billion, led by strength in Handsets, IoT, and Automotive. Handset revenue grew 12% Y/Y to $6.9 billion, supported by Snapdragon 8 Gen 3 and Elite adoption. IoT increased 27% Y/Y to $1.6 billion, led by industrial applications and AI-enabled edge computing. Automotive surged 59% Y/Y to $959 million on new design wins and launches across global OEMs.
QCT is expected to grow ~12% Y/Y at the midpoint of third-quarter guidance, with continued strength in premium-tier Android, industrial, IoT, and auto; Automotive and IoT are guided to grow ~20% and 15% Y/Y, respectively. QTL (Qualcomm Technology Licensing) revenue is expected at $1.15 billion-$1.35 billion with a 67%-71% EBT margin.
For the third quarter, Qualcomm guided revenue to $9.9 billion-$10.7 billion and EPS to $2.60-$2.80, reflecting stable handset seasonality, strong IoT and auto demand, and a modest Apple Inc (NASDAQ:AAPL) share step-down.
Cassidy lowered his revenue estimate for the June quarter to $10.25 billion from $10.5 billion. Adjusted EPS is estimated to be $2.70, down from $2.82.
Benchmark: Qualcomm delivered a nearly $200 million upside revenue performance for the March quarter on strong broad-based demand strength across all its major markets. The company benefited marginally from Apple pull-ins in its handset business during the quarter.
However, they were adamant that it did not see any material pull-ins and that customer orders remain reasonable and consistent.
Qualcomm’s handset revenue has benefited from stronger subsidy-driven premium-tier Android shipments in the Chinese market. While Qualcomm indicated no material direct impact on its cost structure from tariffs, it did note some minor changes in demand.
Qualcomm expects its licensing business to be about flat year-over-year for the June quarter and down about 5% sequentially, reflecting normal seasonality in handset units. In QCT, the company expects revenues of $8.7 billion-$9.3 billion, with annual revenue growth of about 12%, led by strength in handsets, which will likely be up 10% Y/Y, IoT, projected to grow 15% annually, and its Automotive business, that is forecast to grow 20% versus last year.
Qualcomm’s June quarter handset business will likely benefit from Samsung Electronics’ (OTC:SSNLF) planned July launch of its new Fold and Flip models, which the analyst expect to be Snapdragon-based designs.
Regarding Qualcomm’s China exposure and the potential for increased tariffs to impact its business, it continues to see China as a standout strength, with increased subsidies driving higher premium-tier Android volumes. Qualcomm has seen no signs of a slowdown in design traction within its Chinese base, including in smartphones, PCs, automotive, and XR applications. The company is also encouraged by its increased momentum in its industrial business.
Acree projected third-quarter revenue of $10.31 billion and EPS of $2.71.
Price Action: Qualcomm stock is down 8.24% at $136.24 at last check Thursday.
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