JPMorgan Gives Qualcomm (QCOM) an Overweight Rating with Revised (2025)

1 day ago

JPMorgan has resumed coverage on Qualcomm (QCOM, Financial) with an Overweight rating, adjusting its price target to $185 from the previous $195 after a period of restriction. While concerns linger over the immediate effects of increased smartphone demand driven by consumer upgrades, the firm maintains a positive outlook on Qualcomm's long-term prospects. This optimism is tied to the company's strategic shift away from a sole reliance on smartphone revenues. According to JPMorgan, Qualcomm's strong performance in the smartphone sector, along with significant advancements in its internet of things and automotive divisions, positions the company as a leader compared to traditional smartphone suppliers. These growth areas are expected to bolster Qualcomm's revenue and overall market standing.

Wall Street Analysts Forecast

Based on the one-year price targets offered by 31 analysts, the average target price for Qualcomm Inc (QCOM, Financial) is $191.90 with a high estimate of $270.00 and a low estimate of $145.00. The average target implies an upside of 30.00% from the current price of $147.62. More detailed estimate data can be found on the Qualcomm Inc (QCOM) Forecast page.

Based on the consensus recommendation from 40 brokerage firms, Qualcomm Inc's (QCOM, Financial) average brokerage recommendation is currently 2.4, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.

Based on GuruFocus estimates, the estimated GF Value for Qualcomm Inc (QCOM, Financial) in one year is $167.08, suggesting a upside of 13.18% from the current price of $147.62. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Qualcomm Inc (QCOM) Summary page.

QCOM Key Business Developments

Release Date: February 05, 2025

• Total Revenue: $11.7 billion, a record for the company.
• Non-GAAP EPS: $3.41, above the high end of guidance.
• QCT Revenue: $10.1 billion, a record, with handset revenues at $7.6 billion.
• QTL Revenue: $1.5 billion with an EBT margin of 75%.
• Automotive Revenue: $961 million, representing 61% year-over-year growth.
• IoT Revenue: $1.5 billion, a 36% year-over-year increase.
• QCT EBT Margin: 32%, exceeding the high end of guidance.
• Stockholder Returns: $2.7 billion, including $1.8 billion in stock repurchases and $942 million in dividends.
• Q2 Guidance - Revenue: $10.2 billion to $11 billion.
• Q2 Guidance - Non-GAAP EPS: $2.70 to $2.90.
• Q2 Guidance - QTL Revenue: $1.25 billion to $1.45 billion with EBT margins of 69% to 73%.
• Q2 Guidance - QCT Revenue: $8.9 billion to $9.5 billion with EBT margins of 29% to 31%.
• Non-GAAP Operating Expenses: Approximately $2.25 billion for Q2.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Qualcomm Inc (QCOM, Financial) reported record revenues of $11.7 billion and non-GAAP earnings per share of $3.41, exceeding the high end of their guidance.
• The chipset business achieved record revenues of $10.1 billion, marking the first $10 billion quarter for QCT, with significant contributions from handset and automotive sectors.
• Automotive and IoT revenues grew impressively by 61% and 36% year over year, respectively, showcasing strong diversification efforts.
• The Snapdragon 8 Elite platform has seen strong demand, particularly with the Samsung Galaxy S25 series and Chinese OEMs, indicating robust market traction.
• Qualcomm Inc (QCOM) has expanded its design win momentum in PCs, with over 80 designs in production or development, targeting more than 100 designs by 2026.

Negative Points

• The QTL guidance for fiscal 2025 is flat compared to 2024, indicating potential challenges in maintaining growth in the licensing segment.
• The second fiscal quarter guidance shows a decline in revenues, primarily due to seasonality and shipments to Apple.
• The ongoing negotiations with Huawei remain unresolved, and the current guidance does not include potential revenue from a renewed agreement.
• There is a potential risk of increased costs due to TSMC's price hikes for 3- and 4-nanometer processes, which may impact future ASPs.
• The market for premium-tier smartphones is growing, but the overall smartphone market remains flat, posing challenges for sustained growth.