Qualcomm (QCOM) is scheduled to report results of its fiscal third quarter after the market closes on July 29 with a conference call scheduled for 4:45 pm ET. What to watch for:
1. Q3 EPS, REVENUE CONSENSUS LOWER: Along with its last report, Qualcomm guided for Q3 adjusted earnings per share of 60c-80c on revenue of $4.4B-$5.2B. At the time, analysts were expecting the company to report Q3 EPS of 75c on revenue of $4.89B, but those figures have since fallen to 71c and $4.81B, respectively.
2. JPMORGAN ADDS TO FOCUS LIST: Earlier this week, JPMorgan analyst Samik Chatterjee raised his price target on Qualcomm to $108 from $100 and added the stock to the firm's Analyst Focus List as a "Growth pick" ahead of the company's Q3 results. The analyst, who kept an Overweight rating on the shares, also sees a "dislocation of the valuation" relative to potential earnings upside on volume and content ramp in 5G smartphones. The smartphone industry backdrop is turning incrementally positive with expectations for stronger demand in the second half of 2020 accompanied by upside to 5G volume expectations, Chatterjee said, adding that he sees upside to near-term consensus estimates and expects improved investor confidence on the earnings to drive a re-rating in Qualcomm shares.
3. MORGAN STANLEY UPGRADE: Last month, Morgan Stanley analyst Joseph Moore upgraded Qualcomm to Overweight from Equal Weight and raised his price target on the shares to $102 from $83, saying he sees smartphone demand improving through the year, with average selling prices rising as the market transitions to 5G devices. Moore added that the elimination of HiSilicon, a major competitor in the Chinese market, should provide a "substantial market share tailwind" for both Qualcomm and Mediatek.
4. ROSENBLATT INITIATION: Also last month, Rosenblatt analyst Kevin Cassidy initiated coverage of Qualcomm with a Buy rating and $105 price target, saying the company is "on the cusp of its next growth phase" as it will not only benefit from the 5G handset upgrade cycle but will also "lead the market in establishing 5G capabilities worldwide." The analyst at the time forecast that Qualcomm's dollar content per handset will grow 25%-50% compared with 4G phones while its 5G platform strategy also expands the company to markets beyond handsets.
5. PC SHIPMENTS: Q2 of 2020 ended well for the Traditional PC market, comprised of desktops, notebooks, and workstations, with global shipments growing 11.2% year over year reaching a total of 72.3 million units, according to preliminary results from the International Data Corporation Worldwide Quarterly Personal Computing Device Tracker released earlier this month. As restrictions around the world tightened in the first few weeks of the quarter, demand for notebooks continued to grow to maintain continuity of business and schooling for many communities, IDC said. Despite logistics issues early in the quarter, the cost and frequency of both air and sea freight inched closer to normal. This, combined with PC production ramping up, and in some cases surpassing previous levels, meant that retailers and other distributors around the world had ample supply and were ready to fulfill the surge in demand, according to IDC.