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What Happened:
Shares of wireless chipmaker Qualcomm (NASDAQ:QCOM)
fell 5.4% in the morning session after Citigroup analyst Christopher Danely downgraded the stock’s rating from Buy to Neutral following the company’s earnings results, citing market share concerns at Samsung (KS:005930). Bank of America analyst Tal Liani highlighted similar concerns, adding, “Concerns over the handset business were echoed elsewhere on Wall Street, with the guidance seen as “lackluster” due to the Samsung issues and problems elsewhere.”
Despite the worries, Qualcomm exceeded analysts’ revenue and EPS expectations during the quarter. While next quarter’s revenue guidance was roughly in line, EPS guidance was above. In addition, it announced the extension of a multiyear agreement with Samsung relating to Snapdragon platforms for Galaxy smartphone launches in 2024.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Qualcomm? Find out by reading the original article on StockStory.
What is the market telling us:
Qualcomm’s shares are somewhat volatile and over the last year have had 6 moves greater than 5%. In context of that, today’s move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 5 months ago, when the stock gained 9.3% on the news that the company announced an agreement with Apple (NASDAQ:AAPL) to provide Snapdragon® 5G Modem-RF Systems for smartphone releases in 2024, 2025, and 2026. Qualcomm is the leading supplier of 5G modems, and this deal with Apple further cements its position in the market. Analysts have been concerned that Apple might be increasingly moving towards in-house production of some of its chipsets, which could have hurt Qualcomm’s business. However, this deal shows that Apple is still committed to using Qualcomm’s modems, which is a positive sign for investors.
Qualcomm is up 1.1% since the beginning of the year, and at $141.82 per share it is trading close to its 52-week high of $154.47 from January 2024. Investors who bought $1,000 worth of Qualcomm’s shares 5 years ago would now be looking at an investment worth $2,859.
