In all likelihood, Qualcomm (NASDAQ:QCOM) could trade in the $100 range in the near future for two reasons. Its settlement with Apple (NASDAQ:AAPL) adds plenty of cash to its balance sheet. And the latest quarter earnings report suggests further growth ahead.
Qualcomm said it will receive between $4.5 billion to $4.7 billion from Apple after the two firms settled on their differences on IP. And for the second quarter, the year-on-year revenue decline at both the QCT and QTL units should be a low-point in the company’s performance. QCT revenue fell 4% to $3.72 billion, while QTL revenue fell 8% to $1.1 billion.
Guidance
The Q3 guidance of $0.70 - $0.80 EPS is a wide range and is also conservative. This leaves management plenty of room to beat consensus estimates. It also lets the company price in a modest rebound in smartphone sales in 2019. At this time, smartphone sales are not growing as strong as it used to but that could change. A refresh in hardware, price cuts, and an upside outlook from Apple could lead to higher chip sales for Qualcomm.
Your Takeaway
Analysts reiterated ‘buy’ calls on QCOM stock, although the price target does not leave much upside. Per tipranks, the PT of $92 is conservative. If next quarter’s results are stronger, look for QCOM stock to trade above that level.
