Qualcomm stock price soared more than 10% after easily beating third-quarter revenue and earnings estimates. Despite slowing smartphone production due to pandemic, the stronger than expected outlook for the final quarter added to investor’s sentiments.
Qualcomm stock crossed the $100 mark for the first time in history and JP Morgan added it to its focus growth stock pick list.
Its third-quarter revenue of $4.9 billion topped analysts’ consensus estimates by $100 million, thanks to the robust performance from the QCT revenue segment. On the negative side, QTL revenue of $1.04 billion fell 19% year over year in the third quarter.
Investors have also applauded its settlement agreement with Huawei and it also agreed on a new long-term global patent license agreement. Qualcomm’s fourth-quarter outlook assumes $1.8 billion in revenue from last year due to royalties and additional QTL royalties due on Huawei sales during the quarter.
“With the signing of the Huawei agreement we are now entering a period in which we have multiyear license agreements with every major handset OEM,” Qualcomm CEO Steve Mollenkopf said on a call with analysts.
The company now expects fourth-quarter revenue in the range of $5.5-6.3 billion compared to the consensus of $5.76 billion. The QCT revenue is likely to stand around $4.3-4.9 billion while QTL revenue could hit $1.2-1.4 billion in the final quarter of the year. The semiconductor company forecasts fourth-quarter earnings per share in the range of $1.05-1.25.
JPMorgan has lifted its price target to $108 with an overweight rating. The firm expects QCOM to report fourth-quarter revenue in the range of $6.06 billion and earnings per share around $1.14.
JPMorgan analyst Samik Chatterjee said,
“The Company will see potential near-term upside from a stronger 5G smartphone outlook and execution on the 5G content and volume ramp to improve investor confidence on the earnings opportunity and drive re-rating in the shares.”