Vivek Kumar
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The world’s biggest mobile phone chipmaker Qualcomm’s shares slumped as much as 8.4% in extended trading on Wednesday after the company warned that the global semiconductor industry is struggling hard to keep up with demand due to supply chain constraints.

“The shortage in the semiconductor industry is across the board,” said incoming Chief Executive Officer Cristiano Amon, Bloomberg reported.

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“Based on Qualcomm’s management, its performance was curbed by supply constraints. Its foundry partners are currently struggling to keep up with demand in some areas of the industry. The management did not specify which products are in shortage but according to our recent checks with Chinese smartphone assemblers, Qualcomm’s PMIC is in severe shortage and therefore volume growth was capped, “according to Fubon Research.

Following this, Qualcomm shares slumped as much as 8.4% to $148.7 in extended trading on Wednesday. However, the stock rose over 70% in 2020.

Qualcomm reported sales of $8.24 billion, missing the Wall Street consensus estimate of $8.27 billion. However, the adjusted profit came in at $2.17 per share, beating the market expectations of $2.10 per share.

Qualcomm reported fiscal first-quarter results consistent with management’s guidance, with the firm benefiting from the ongoing ramp of 5G smartphones. Chipset, or QCT, sales were boosted by Apple’s 5G iPhone 12 that features the Qualcomm modem and other content such as a transceiver and subsystem for the sub-6 GHz portion of the overall 5Gmodule,” said Abhinav Davuluri, sector strategist at Morningstar.

“For calendar 2021, management expects high-single-digit unit growth for smartphones, with a range of 450 million to 550 million 5G handset shipments. Shares of narrow-moat Qualcomm were down 6% after hours, which we attribute to the market having lofty expectations after Skyworks, a major RF supplier, recently beat its quarterly guidance by more than 40%. That said, the firm’s results and forecast were ahead of our prior expectations, and thus we are raising our fair value estimate to $136 per share from $124.  Nevertheless, shares look overvalued at current levels.”

Qualcomm Stock Price Forecast

Twenty-four analysts who offered stock ratings for Qualcomm in the last three months forecast the average price in 12 months at $171.61 with a high forecast of $200.00 and a low forecast of $125.00.

The average price target represents a 5.74% increase from the last price of $162.30. From those 24 analysts, 17 rated “Buy”, seven rated “Hold”, and none rate “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $171 with a high of $194 under a bull scenario and $113 under the worst-case scenario. The firm currently has an “Overweight” rating on the semiconductor company’s stock.

Several other analysts have also recently commented on the stock. Rosenblatt Securities raised the price target to $175 from $155. UBS upped the price objective to $155 from $125. Bernstein increased the target price to $185 from $175. Qualcomm had its price target hoisted by Raymond James to $190 from $150. The brokerage currently has a strong-buy rating on the wireless technology company’s stock.

In addition, Cowen upped their price objective to $180 from $170 and gave the stock an outperform rating. Piper Sandler upped their price objective to $150 from $140 and gave the stock a neutral rating.


Analyst Comments

“We see an improvement in smartphone demand in 2021 after declining 5% in 2020 due to COVID-19. We also see 5G adding greater dollar content and supporting industry-wide handset volume growth. Qualcomm’s (QCOM) leadership in cellular technologies (3G/4G/5G) puts the company in a favourable position to maintain leading market share,” said Joseph Moore, equity analyst at Morgan Stanley.

“The potential elimination of a major competitor in the Chinese market, HiSilicon, should benefit QCOM as Huawei currently does not pay royalties. To the extent competitors that do pay royalties are able to pick up market share, that would be beneficial for QCOM.”

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