QCOM Overvalued?
Read management/analysts’ comments on Qualcomm’s Q1 results
Investors will be closely following the chipmaker’s second-quarter earnings announcement, which is expected on Wednesday after the regular trading hours, to track its stock-market performance. On a bullish note, experts predict that earnings would more than double to $1.67 per share on revenues of $7.62 billion, which represents a 46% growth.
Mobile Prowess
Qualcomm’s dominance in the smartphone market gives it an edge over rivals in terms of tapping 5G opportunities because all major smartphone makers are likely to come up with their 5G variants in the coming months. The management also banks on the prospects of extending the company’s product offerings to adjacent industries like automotive and the impressive performance of its 5G-focused RAF front-end portfolio.
From Qualcomm’s first-quarter 2021 earnings conference call:
“We are executing extremely well in our strategy to address many of the technical challenges of delivering a true modem-to-antenna 5G experience and capture a higher dollar share of content in smartphones. We are also well-positioned with design wins across the mobile handset ecosystem, a strong pipeline for further growth in smartphones, and a roadmap to bring our RF expertise to adjacent industries.“
Looking Ahead
Underscoring the sustainability of its business model, the company has survived multiple legal challenges related to its alleged monopoly in the mobile phone market. At the same time, the steady growth of cash flow has eased the burden of the relatively high debt. Meanwhile, with the market still reeling under the grip of COVID, the issues related to chip supply might persist in the near future, hampering Qualcomm’s sales.
Sales got a major boost from elevated chip demand and revenues surged 62% to $8.3 billion in the first quarter. However, the top-line fell short of the market’s projection. Earnings more than doubled to $2.17 per share and topped expectations, as they did in the past several quarters.
AMD sees a promising year ahead amid unprecedented chip demand
Shares of Qualcomm lost about 9% in the past four months, with most of the contraction coming after the mixed first-quarter results. Staying comfortably above its 52-week average, the stock traded slightly lower early Monday, after closing the last session up 2%.