On Thursday, JPMorgan maintained an Overweight rating on shares of Qualcomm (NASDAQ:) and increased the price target to $185 from the previous $170. The firm’s analysis highlighted Qualcomm’s second fiscal quarter performance, which aligned with the mid-point of the company’s earlier guidance.
The outlook for the third fiscal quarter (F3Q) was noted for its limited seasonal decline, which is expected to be -2% at the mid-point. This forecast is bolstered by strong demand trends in the Android Smartphone market, as well as significant growth in the Internet of Things (IoT) and Automotive sectors.
According to JPMorgan, the anticipated F3Q is likely to be less impacted by seasonality than previously expected, providing reassurance to investors about Qualcomm’s revenue prospects. The analyst pointed out that the limited downside in F3Q suggests a more optimistic scenario for the company, which includes a recovery in the smartphone market, a better product mix with growth in high-end smartphones, advancements in AI smartphones, a rebound in IoT revenues after cyclical challenges, and a substantial increase in Automotive revenue.
Qualcomm’s diversification efforts beyond smartphones, which had been overshadowed by earlier market headwinds, are now gaining attention due to stabilizing market trends. The firm’s growth in the Automotive and IoT segments is expected to offset typical smartphone seasonality and distinguish Qualcomm from other smartphone suppliers like Skyworks (NASDAQ:), Qorvo (NASDAQ:), and Mediatek, particularly regarding expectations for the June quarter.
The positive trends in Qualcomm’s Technology Licensing (QCT) segment have led JPMorgan to adjust its financial estimates for fiscal years 2025 and 2026 upwards. These adjustments contribute to the revised December 2024 price target of $185. The analyst emphasized the robust growth in revenues from Chinese Original Equipment Manufacturers (OEMs), which surged over 40% year-over-year in the first half of 2024, with the trend projected to continue.
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InvestingPro Insights
In light of JPMorgan’s optimistic outlook for Qualcomm (NASDAQ:QCOM), real-time data from InvestingPro further supports the positive sentiment. Qualcomm’s market capitalization stands strong at $183.29 billion, indicating a robust position in the market. The company’s P/E ratio has adjusted to a more attractive 19.87 over the last…
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