Qualcomm Q4 Earnings Preview: Analysts Expect Beat And Raise; Smartphone Demand, Lost Apple Revenue Bring Cautious Outlook

Technology company Qualcomm Inc (NASDAQ:QCOM) could highlight its diversifying revenue and lowered reliance on the smartphone market when the company reports fourth-quarter financial results Wednesday after market close.

Earnings Estimates: Analysts expect Qualcomm to report fourth-quarter revenue of $9.91 billion. That’s up from last year's fourth-quarter total of $8.67 billion, according to data from Benzinga Pro.

The company has beaten analyst estimates for revenue in four straight quarters and eight of the last 10 quarters overall.

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Analysts expect the company to report fourth-quarter earnings per share of $2.56, up from $2.02 in last year's fourth quarter. The company has beaten analyst estimates for earnings per share in five straight quarters. Qualcomm has beaten estimates in eight of the last 10 quarters with two makes and no misses in the stretch.

Guidance from the company calls for fourth-quarter revenue to be in a range of $9.5 billion to $10.3 billion and earnings per share to be in a range of $2.45 to $2.65.

What Analysts Are Saying: Challenges in the smartphone sector continue to be an issue for Qualcomm, JPMorgan analyst Samik Chatterjee said in a new investor note.

"Qualcomm is challenged by the lack of recovery in the smartphone market, which is driving the strength in the smartphone component supply chain in 1H24 led by inventory refill by Chinese smartphone OEMs," Chatterjee said.

The analyst has an Overweight rating and lowered the price target from $210 to $195.

Chatterjee said along with smartphone challenges, Qualcomm faces a loss of revenue to Huawei and adoption of AI PCs and AI smartphones could take time.

The analyst sees potential downside from the upcoming earnings report, even with the stock pulling back in recent weeks.

Sustainable growth and diversified exposure to automotive, industrial IoT and consumer IoT could help re-rate the stock in the future, the analyst said.

A strong fourth quarter from Qualcomm could help deliver a "short cover" rally, Cantor Fitzgerald analyst C.J. Muse said in a new investor note.

"Look for QCOM to offer a beat and modest raise as a result of strength in premium handsets in domestic China and higher ASP with the new Snapdragon AP," Muse said.

The analyst has a Neutral rating on Qualcomm with a $160 price target.

Qualcomm's higher exposure to Samsung and less exposure to mid-tier handsets could lead to better results from the company than peers, the analyst said.

The analyst does have concerns about Qualcomm's potential lost business to Apple Inc (NASDAQ:AAPL).

"Bigger picture, while we applaud the company's diversification efforts, structural concerns regarding the loss of Apple modem biz, China exposure/desire to in-source and expected slow uptake for ARM PC CPU's keep us on the sidelines."

The analyst points to Qualcomm's Automotive and IoT investor day on Nov. 19 as a potential catalyst to hear about financial targets that could help offset the loss of revenue from Apple.

Price Action: Qualcomm stock was up 0.4% to $165.91 on Tuesday versus a 52-week trading range of $118.38 to $230.63. Qualcomm stock is up 18% year-to-date in 2024.

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