On Thursday, Wolfe Research updated its stance on Qualcomm (NASDAQ:QCOM) shares, increasing the price target to $200 from the previous $180 while retaining an Outperform rating on the stock.
The firm's analysis indicated that Qualcomm's performance in the March quarter was on target and its guidance for the June quarter exceeded expectations, with revenues predicted to decrease by 2% quarter-over-quarter.
Qualcomm's financial results were bolstered by a significant 40% year-over-year increase in China Android sales during the first half of the fiscal year 2024, attributed to inventory normalization.
This upswing helped to balance out the loss of market share previously reported at Samsung (KS:005930). In contrast to Skyworks Solutions (NASDAQ:SWKS), which noted unusual iPhone seasonality the day before, Qualcomm made no such remarks.
The research firm anticipates modest growth in the Internet of Things (IoT) sector, driven by inventory normalization and some improvement in end demand. Additionally, moderate growth is expected in the automotive sector as Qualcomm begins shipping to its automotive pipeline.
The firm's analysts suggest that improvements in Qualcomm's licensing division (QTL) will likely hinge on the recovery of the mid-range phone market, which they believe is achievable as end demand stabilizes over time.
Wolfe Research has adjusted its revenue and earnings per share (EPS) estimates for the fiscal year 2025 to $42 billion and $10.99, respectively. This revision is based on the assumption that Qualcomm will achieve a fair valuation of 15 times earnings, considering the potential growth levers in IoT, automotive, and QTL, along with stability in the handset segment.
InvestingPro Insights
Qualcomm (NASDAQ:QCOM) has demonstrated resilience and growth potential as reflected in the latest InvestingPro metrics. The company's market capitalization stands strong at $183.29 billion, and while the revenue has seen a slight decline of 11.35% over the last twelve months as of Q2 2024, the three-month price total return impressively increased by 16.41%. This uptick is a testament to Qualcomm's robust market position and the positive sentiment surrounding its stock, which is currently trading at 92.36% of its 52-week high.
Investors may find Qualcomm's commitment to shareholder returns particularly reassuring, as the company has not only maintained but also increased its dividend for 22 consecutive years. The dividend yield as of the latest data is 2.07%, with a notable dividend growth of 13.33% over the last twelve months as of Q2 2024. This InvestingPro Tip highlights the company's consistent return to shareholders, which could be a key factor for those seeking stable income-generating investments.
Another InvestingPro Tip points out Qualcomm's low price volatility, which may appeal to investors looking for a less risky entry into the tech sector. Paired with the company's strong return over the last five years, Qualcomm presents a compelling case for long-term investment.
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