Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money

79% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Tricks of the trade

How to Day Trade Stocks & Indices

Learn how to:

  • Place your first trade
  • Identify 9 chart patterns
  • Pro strategies step-by-step

You'll also receive our newsletter and other Opto emails in accordance with our privacy policy.

Earnings

Qualcomm share price: what to expect in Q1 earnings

As the lockdown continues, Qualcomm’s [QCOM] share price has dropped along with consumer appetite for the latest Smartphone. But will 5G innovation see it bounce back in Q1 earnings?

Qualcomm's share price has come under pressure in the coronavirus-triggered sell-off. A maker of semiconductors used in smartphones, the company is vulnerable to any drop in consumer demand. And with jobs being cut and businesses closed, people are no longer prioritising buying the latest smartphone. 

Yet, Qualcomm’s investment in 5G technology and technological innovation could still see a bump in earnings this quarter, and a post-earnings share price bounce perhaps.

So, what should Qualcomm’s share price investors expect of the firm’s Q1 earnings performance?

 

 

What's happening with Qualcomm's share price?

Qualcomm's share price is down over 15% so far this year. Unsurprisingly, those losses came in February as coronavirus fears took hold. Back then the company touched an all-time high of $96.17. Since closing at $60.91 on 20 March, Qualcomm's share price has rallied over 23%. Investors in Qualcomm’s share price will be hoping Q1 earnings continue this recovery.

 

When does Qualcomm report Q1 earnings?

29 April

 

Why should investors care?

Growing 5G adoption

Qualcomm delivered the innovative Snapdragon Ride during the quarter. This technology lets car manufacturers turn their vehicles into self-driving AI rides. Qualcomm also introduced the third-generation of its 5G modem - the X60. The chip boosts network performance and is in use in high-end smartphones. These releases and 5G adoption are likely to benefit earnings this quarter. 

 

Global smartphone sales plummet

2020 is set to see mobile phone sales plummet to their lowest levels in a decade, according to analyst CCS Insights. Smartphone sales are expected to come in at 1.26 billion, down from the 1.41 billion seen in 2019. The closure of retail stores and the lockdown mean upgrading to the latest handset is no longer a priority for consumers.

As a smartphone chip maker, this will impact revenues in 2020. Yet things look brighter next year as CCS expects sales to strengthen in line with an economic recovery. For 2021, it reckons sales will be up 12 per cent and back to their 2019 levels. While 2022 will see sales bounce back with up to 2 billion phones sold worldwide.

$1.26billion

Expected smartphone sales - drop from 1.41bn in 2019

  

Goldman Sachs downgrades Qualcomm

April saw Goldman Sachs reduce its rating for Qualcomm to Sell. Analysts at the bank cited weakening customer demand caused by the coronavirus outbreak. In a note to investors, Goldman analysts, said:

“We are reducing our calendar year 2020 and 2021 3G/4G units estimate by 12.5% and 10.0%, respectively, … due to the anticipated impacts from COVID-19 and weakening consumer confidence, which we believe reduces smartphone replacement rates.”

Goldman's cut its 2021 earnings forecast 10% to $5.04 a share. It also slashed its 12-month price target from $77 to $61.

“We are reducing our calendar year 2020 and 2021 3G/4G units estimate by 12.5% and 10.0%, respectively,...due to the anticipated impacts from COVID-19 and weakening consumer confidence, which we believe reduces smartphone replacement rates” - Goldman analysts

 

What are analysts expecting?

Analysts are expecting Qualcomm to post earnings of $0.79, marginally better than the $0.77 seen in the same quarter last year. Revenue is expected to come in at $5.08 billion for the quarter, up from last year's $4.98 billion.

Will Qualcomm beat expectations? In the past four quarters, the company has beat predictions. In Q4 Qualcomm delivered earnings of $0.99 per share, thrashing the expected $0.85. However, that was a very different time in the markets. 

$5.08billion

Qualcomm's expected revenue for Q1

  

Is Qualcomm’s share price a buy?

Of the 23 analysts tracking the stock on Yahoo Finance, 13 rate it a Hold. The rest rate it either a Strong Buy or a Buy. An average $89.86 12-month price target would see a 19.4% upside. For income-seeking investors, the stock carries a decent 3.52% forward dividend yield.

Qualcomm plans to develop chips for use in mass-produced phones this year - and not just the higher end of the market. It also expects 5G adoption to be faster than 4G. In any other year, both would drive sales in the near-future. However, 2020 isn't any other year.

 

Market Cap$86.059bn
PE ratio (TTM)21.36
EPS (TTM)3.52
Quarterly Revenue Growth (YoY)4.90%

Qualcomm share price vitals, Yahoo Finance, 29 April 2020

Continue reading for FREE

Join the 30,000+ subscribers getting market-moving news every week.

Written by

Free ebook

Tricks of the trade: 7 interviews with the world’s top traders

Get it now

Disclaimer

Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

Related articles