Qualcomm Inc. shares finished Thursday with their worst day in two-and-a-half years after the chip maker said it was still drawing down phone handset inventory, and analysts looked on the bright side of the “lackluster” results.
Qualcomm
QCOM,
shares fell 8.2% to close at $118.70 on Thursday, for their worst one-day performance since Feb. 4, 2021, when the stock finished down 8.8% after the company said pandemic supply constraints were hampering results.
Late Wednesday, the company forecast a lighter-than-expected quarter, as it continued drawing down inventory because of weak smartphone demand, and said revenue growth was tied to a recovery in demand. Qualcomm reported that handset revenue fell 15% to $5.26 billion from the year-ago quarter, and forecast that handset units for 2023 would decline “at least a high-single-digit percentage,” from 2022 figures.
In a note titled “Nobody loves me…,” Bernstein analyst Stacy Rasgon, who has an outperform rating and a $135 price target on Qualcomm, said results were “lackluster (though presumably not surprising),” because of the company’s forecast a quarter ago.
Back in May, Qualcomm’s stock fell under pressure after the company said it would be drawing down inventory for “at least the next couple quarters.”
“We have a hard time believing the results were hugely shocking at this point (revenue outlook was dead inline with us at least),” Rasgon said. “And the company is clearly controlling everything they can.”
Susquehanna Financial analyst Christopher Rolland, who has a positive rating, lowered his price target on Qualcomm to $145 from $140. Rolland said that while the results and outlook were “disappointing” as the inventory drawdown looks to remain until the end of the year, “the bottom is now in the rearview.”
“Overall, while the recovery may be slower to get its legs off the ground given continued softness in handsets, inventories and the macro, we still believe CEO [Cristiano] Amon is proving Qualcomm can move beyond a modem and cellular IP company to become a true broad-based semiconductor player,” Rolland said.
Of the 33 analysts who cover Qualcomm, 21 have buy-grade ratings, 11 have hold ratings and one has a sell rating, along with an average target price of $135.48, according to FactSet data.
At Thursday’s close, Qualcomm shares were up 8% year to date, compared with a 46.4% gain by the PHLX Semiconductor Index
SOX,
a 17.3% gain by the S&P 500
SPX,
and a 33.4% gain by the tech-heavy Nasdaq Composite Index
COMP,
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