Qualcomm (QCOM.US) is one of the best performing stocks in today's US pre-market trading. Semiconductor manufacturer reported strong growth in third quarter earnings and provided an upbeat outlook for the coming quarter. Moreover, positive outlook provided by one of world's largest chip companies gives hope that supply issues in the global economy may be easing.
Strong Q3 sales but profits miss expectations
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Create account Try a demo Download mobile app Download mobile appQualcomm (QCOM.US) reported a 12% YoY increase in fiscal-Q4 (calendar-Q3) revenue to $9.32 billion (exp. $8.86 billion). Adjusted net income jumped to $2.557 billion from $1.456 billion a year ago. Adjusted EPS improved from $1.27 to $2.24 (exp $2.26). Semiconductor sales increased 56% YoY and reached $7.7 billion. Sales of chips for Internet-of-Things business jumped 66% YoY to $1.5 billion while sales of chips for 5G networks grew 45% YoY, to $1.24 billion. Handset chip business generated $4.69 billion in sales during the quarter. The company has also said that it bought $1.54 billion worth of own shares during the quarter.
Qualcomm showed a very strong pace of sales and earnings growth in the July-September quarter. However, analysts expected even more and most of the earnings metrics missed expectations. Source: Bloobmerg, XTB
Upbeat outlook
Solid performance in the July-September quarter encouraged the company to boost guidance for the current quarter. Qualcomm expects revenue during the fiscal-Q1 (calendar-Q4) to reach $10-10.8 billion, above market estimate of $9.73 billion. EPS is expected to reach $2.90-3.10, also above market consensus ($2.58). Qualcomm expects to supply chips for 550 million 5G smartphones in 2022, slightly lower than previous forecast. Company's CEO said that currently most of the growth comes from Android smartphones.
Shortages not that hard for company
Qualcomm made a decision to diversify by sourcing out semiconductor production to many manufacturers and foundries. The decision is paying off as results presented by the company show that Qualcomm is performing very well amid ever present supply constraints. Company continues to diversify not only its suppliers but also its revenue stream with more emphasis being put on automotive chips and less on smartphone chips. Solid beat from Qualcomm may also suggest that broad issues on the semiconductor market begin to ease.
While Qualcomm operations held up firm during the ongoing semiconductor market crunch, the company's stock has been lagging the Philadelphia Semiconductor Index significantly this year. Source: Bloomberg
Technical Analysis
Qualcomm (QCOM.US) finished yesterday's trading at the 200-session moving average (purple line) in the $138.70 area. However, shares rallied in overnight trading and are expected to launch today's Wall Street session with a big bullish price gap. Current pre-market quotes point to an over-8% bullish price gap and stock opening near $150.00 mark. This would mean opening near the topside resistance of a recent $125-150 trading range. A decisive break above the $150 area could trigger an upward move with a textbook range of around $25. Such a price jump would push the stock to fresh record highs.
Source: xStation5
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