What to Expect When Qualcomm Reports

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Qualcomm Inc. (NASDAQ: QCOM) is scheduled to release its most recent quarterly report after the markets close on Wednesday. The consensus estimates from Thomson Reuters are calling for $0.81 in EPS and $5.26 billion in revenue. The fiscal third quarter from last year had $1.16 in EPS and $6.03 billion in revenue.

This company has been the king of processors in the mobile phone and tablet arena. Its growth recently ran into some headwinds as customers such as Apple chose to go in-house or to cheaper rivals, and the company also has had royalty disputes. Now Qualcomm is hoping to bolster its growth and diversify its revenues away from just expensive microprocessors with the acquisition of a much more diversified NXP Semiconductors in a deal valued at close to $40 billion.

The NXP deal is expected to close at the end of 2017 and should be immediately accretive to earnings. The merger brings together complementary products for mobile, automotive, Internet of Things and networking applications. The JPMorgan report noted:

Now that Apple has stopped making royalty payments we think one of the worst pieces of news is past. We see the stock as inexpensive but would also note the possibility of further news driven volatility.

A few analysts weighed in on Qualcomm ahead of the earnings release:

  • Morgan Stanley has an Equal Weight rating with a $60 price target.
  • Stifel has a Buy rating with a $65 price target.
  • Cowen has an Outperform rating.
  • BMO Capital Markets has a Market Perform rating with a $54 price target.
  • Rosenblatt Securities has a Neutral rating with a $56 price target.
  • Sanford Bernstein has a Market Perform rating with a $60 price target.
  • Canaccord Genuity has a Buy rating with a $70 price target.
  • Northland Securities has a Market Perform rating.
  • Wells Fargo has an Outperform rating.

So far in 2017, Qualcomm has underperformed the broad markets with the stock down nearly 14% year to date. Over the past 52-weeks the stock is actually up about 2%.

Shares of Qualcomm were last trading at $56.33, with a consensus analyst price target of $60.63 and a 52-week range of $51.05 to $71.62.