By Senad Karaahmetovic
Shares of Qualcomm (NASDAQ:QCOM) are down 3.6% in premarket Thursday after the company offered soft guidance.
QCOM reported an adjusted EPS of $2.96 on revenue of $10.93 billion to top the average analyst estimate of EPS of $2.86 on revenue of $10.87 billion.
The company also announced the extension of the partnership with Samsung (KS:005930).
As for this quarter, QCOM expects to generate revenues between $11 billion and $11.8 billion, missing the consensus of $11.92 billion. The adjusted EPS is seen between $3 and $3.30, again lower than the estimate of $3.26.
“The mid-point of our fourth quarter fiscal 2022 guidance includes an estimated impact of an approximate $0.20 reduction to EPS due to macroeconomic headwinds and a reduction in the global handset forecast,” Qualcomm said in a press release.
An Edward Jones analyst upgraded to Buy from Hold as he believes the current market valuation doesn’t fully reflect the growth outlook.
“This was a mixed quarter for Qualcomm, in our view. While the quarter itself was solid, weaker-than-expected guidance will likely weigh on the stock… While we expect next year's comparisons to be challenging, we see value in Qualcomm's business. We believe the company's dominant position within 5G technology and proven licensing model are currently underappreciated by the market. We find shares to be attractively valued,” the analyst told clients in a note.
A Rosenblatt analyst also reflected positively on the outlook for QCOM after seeing a “better than feared” outlook.
“Qualcomm’s dominant market share in premium and high-tier, shields revenue from declining as much as the total market. We see the announced strategic partnership with Samsung as significant not only for gaining share in Galaxy smartphones but also expanding into tablets, PCs and other new Samsung products. Extending the Samsung licensing agreement at the same terms through 2030 is also positive. We maintain our Buy recommendation for the QCOM shares. We are believers in management’s strategy for moving its 5G platform into adjacent markets as the 5G network expands,” the analyst wrote in a research note.