Qualcomm Beat Q1 Expectations: Why One Analyst Flags Huawei As A 'Key Risk Factor'

Shares of Qualcomm Inc (NASDAQ: QCOM) tanked in early trading on Thursday, even after the company reported strong quarterly results and the extension of its deal with Apple Inc (NASDAQ: AAPL).

The results came amid an exciting earnings season. Here are some key analyst takeaways from the release.

• KeyBanc Capital Markets analyst John Vinh maintained an Overweight rating, while raising the price target from $165 to $180.
• Piper Sandler analyst Harsh Kumar reiterated an Overweight rating, while lifting the price target from $140 to $165.
• Cantor Fitzgerald analyst C.J. Muse reaffirmed a Neutral rating and price target of $150.
• Bank of America Securities analyst Tal Liani maintained a Buy rating and price target of $173.
• Oppenheimer analyst Rick Schafer reiterated an Perform rating on the stock.

Check out other analyst stock ratings.

KeyBanc Capital Markets: Qualcomm reported strong results for its fiscal first quarter, which topped expectations, with upside being driven by “stronger than expected Android smartphone demand and robust auto,” Vinh said in a note.

“In F2Q, Android demand is sustained with shipments expected to be flat q/q, with AAPL expected to be seasonally down,” the analyst stated. Qualcomm announced that it has extended a multiyear chip agreement with Samsung as well as “extended licensing agreements with AAPL for 2 years and 2 Chinese OEMs,” he added.

Piper Sandler: “The company appears to be benefiting from strong trends at its modem-only customer,” Kumar wrote in a note. He added that tailwinds for Qualcomm included “a recovery in the Android space both at Samsung and the China geo.”

This backdrop is allowing Qualcomm to “display a steady cadence of revenue and EPS growth,” the analyst said.

Cantor Fitzgerald: Despite handset weakness in China, Qualcomm delivered a solid beat and raise quarter, Muse said. “And looking to the March Q, Android revenues are expected to be flat Q/Q, supporting a revenue guide of only down 6% Q/Q,” he added.

“Elsewhere, Automotive reached record levels again in December, while IoT likely bottomed in 4Q and was guided to recover throughout CY24,” the analyst further stated.

BofA Securities: “Strong automotive and handset semiconductor revenues in 1Q drove better than expected results,” Liani wrote in a note.

He added, however, that the guidance was “somewhat lackluster,” reflecting flat handset trends in both the second and third quarters. “We also flag Huawei re-entering the Chinese 5G handset market as a key risk factor,” the analyst stated.

Oppenheimer: Qualcomm’s first-quarter sales benefited from the Samsung S24 launch, Schafer said. Although handset grew by 23% sequentially in the first quarter, it is expected to decline by around 7% in the second quarter “on Apple seasonality partially offset by Android (flat Q/Q),” he added.

“Mgmt sees handset resuming normal seasonal patterns in CY24,” the analyst stated. “Mgmt sees the overall handset market flattish in ’24 with 5G units up HSD%,” he added.

QCOM Price Action: Shares of Qualcomm had declined by 3.87% to $142.76 at the time of publication on Thursday.

Image: Shutterstock