Home Markets Qualcomm shares fall on weak first-quarter outlook

Qualcomm shares fall on weak first-quarter outlook

by SuperiorInvest

Cristiano Amon, president and CEO of Qualcomm Incorporated, speaks during an interview with CNBC on the floor of the New York Stock Exchange (NYSE) in New York, April 28, 2022.

Brendan McDermid | Reuters

Chipmaker stock Qualcomm fell 7.7% on Thursday, a day after the company reported weak forecasts for the first quarter and said it had initiated a hiring freeze in the current quarter.

Qualcomm reported fourth-quarter earnings that were in line with analysts’ estimates of $3.13 per share on an adjusted basis and a slight increase in revenue of an adjusted $11.39 billion, compared with the $11.37 billion analysts had expected, according to Refinitiv .

But the company called for fiscal first-quarter adjusted earnings of $2.25 to $2.45 per share on revenue of $9.2 billion to $10 billion. Analysts polled by Refinitiv had expected earnings per share of $3.42 on revenue of $12.02 billion.

“The rapid deterioration in demand and the easing of supply constraints across the semiconductor industry led to an increase in channel inventories,” the company said in a report.

Speaking about the company’s earnings, CEO Cristiano Amon emphasized that the company was looking at a “temporary cyclical drawdown of inventory.”

In notes to clients following the report, several analysts seemed to agree that Qualcomm would come out the other side of the headwind in a solid position.

“Despite the cyclical slowdown, we believe Qualcomm management is delivering on its diversification growth strategy and expect Qualcomm is likely to see healthy growth trends once the inventory correction is complete,” Canaccord Genuity analysts wrote, maintaining a buy rating on the stock and lowering their price target from 225 USD to USD 165.

Analysts at Piper Sandler maintained an outperform rating but cut their price target from $185 to $145, saying they “view the drawdown as limited to the December and March quarters.”

Analysts at KeyBanc Capital Markets also maintained an outperform rating but cut their price target from $170 to $150, saying they view Qualcomm’s results as “disappointing” but “see favorable risk/reward with forward estimates thrown out.”

-CNBC’s Ashley Capoot and Jordan Novet contributed to this report.

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