Qualcomm’s (NASDAQ:QCOM) revenue growth of 6.1% in the second quarter is a reminder that the mobile chip market is healthy. Despite Covid-19 disrupting the non-mobile market, Qualcomm has strong 5G chip sales ahead, especially in China. After the lockdown ended in China and business resumed at almost 100%, Qualcomm will likely continue posting strong revenue ahead.
Qualcomm earned 88 cents a share in the last quarter. Revenue topped $5.2 billion. Investors are not too concerned by the smartphone handset sales drop of 21%. Because the company is a leader in 5G, device suppliers need to pay a higher average selling price for the chip.
Plus, the Snapdragon chip is coupled with the modem-to-antenna solution and a radio frequency front-end. QCOM said that its QCT unit benefited from 5G design wins. Licensing business is stronger than ever after the company signed more than 85 5G license agreements. This is up from 80 agreements last year.
Outlook
Qualcomm forecast a 30% handset market decline in the June quarter. The impact of shutdowns in the rest of the world will weigh on results.
Conversely, it will benefit from a rebound in China. Despite the near-term warning, it expects “no change in its calendar year 2020 5G smartphone forecast.”
QCOM trades at 12.8 times forward P/E. The stock remains inexpensive for tech investors. QCOM stock is worth $85 based on this DCF growth exit model (on finbox.io).
Tech Insider
