Shares of Qualcomm (NASDAQ:QCOM) are up more than 8% in premarket trading Thursday after the chipmaker reported Q2 2022 earnings and revenue that beat analyst estimates.
QCOM reported adjusted EPS of $3.21, up 69% YoY, topping the consensus estimates of $2.91 per share. The company generated $11.16 billion in revenue in the quarter, up 41% YoY and above the expected $10.60 billion.
Its QCT segment reported sales of $9.55 billion, beating the consensus estimates of $8.86 billion, and up 52% YoY. QTL unit generated $1.58 billion, down 2% YoY and slightly above the consensus projection of $1.55 billion.
All of Qualcomm’s primary chip markets grew in the period. The handsets market grew 56% YoY to $6.33 billion, while RF front-end saw a 28% growth to $1.16 billion. The chipmaker generated $339 million in automotive sales, up 41% YoY. The IoT business grew 61% YoY to $1.72 billion.
QCOM reported $764 million in cash dividends and bought back $951 million worth of its shares in the first quarter.
For Q3, the chipmaker expects EPS in the range of $2.75 to $2.95 on roughly $10.9 billion in sales, compared to analyst estimates of a $9.98 billion sales forecast.
Raymond James analyst Chris Caso reiterated a Strong Buy rating after Q1 results showed there were “no problems here.”
“Qualcomm silenced the critics with a strong report and guidance despite chatter regarding China handset weakness during the quarter. The main source of upside vs. expectations was share gains on Samsung’s flagship platform, which carries high Qualcomm content… The stock has derated on higher numbers, having achieved the bull case expectation of $12+ in implied earnings power laid out at the analyst day, resulting in the stock now trading under 11x our revised FY23 EPS, providing what we consider to be a very attractive valuation,” Caso said in a client note.
Morgan Stanley analyst Joseph Moore said QCOM “shrugged off concerns around China smartphones.” The analyst raised the price target to $170.00 per share from $167.00.
“We expected to see the solid demand environment for QCT products (SoC, auto, IoT) persist through the March quarter, as previewed, with some weakness around royalties and RF adding potential risk to upside in the quarter and guidance, but strong ASP growth and a favorable demand environment in high-end and premium tier continues to take overall numbers higher… Looking ahead to the June and September quarters, we prefer to take a more cautious view,” Moore wrote in a memo.
By Senad Karaahmetovic