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Tim Smith
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Close up. Qualcomm logo atop company office. Qualcomm Incorporated is an American multinational semiconductor and telecommunications equipment company

QUALCOMM Incorporated (QCOM) shares surged 5.21% in extended-hours trade Wednesday after the company delivered a quarterly earnings report that blew past Wall Street’s expectations.

The San Diego-based chipmaker disclosed a fiscal second quarter (Q2) adjusted profit of $1.90 per share, with the figure coming in ahead of the $1.67 consensus mark and growing 116% from a year earlier. Meanwhile, revenues of $7.94 billion topped the Street forecast and surged 52% from the March 2020 quarter. Management credited higher phone demand and robust handset shipments to China for the better-than-expected results.

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Moving forward, the company sees fiscal Q3 adjusted earnings of $1.55 to $1.75 per share on revenues of $7.1 billion to $7.9 billion. Analysts forecast adjusted EPS of $1.52 and $7.11 billion in sales. “Looking ahead, Qualcomm is well-positioned for continued growth, and we remain confident in our ability to execute on the many opportunities in front of us,” said CEO Steve Mollenkopf in a statement accompanying the results, per MarketWatch.

Through Wednesday’s close, Qualcomm stock has a market capitalization of $156.78 billion, offers a 1.99% dividend yield, and trades 10.35% lower since the start of the year. However, the shares have gained over 80% over the past 12 months, outpacing the sector average by 6%. Valuation-wise, the stock trades 18.5% above its five-year average forward earnings multiple of 16.

Wall Street View

Earlier this month, Susquehanna analyst Christopher Rolland downgraded the stock to ‘Neutral’ from ‘Positive’ and trimmed his price target from $175 to $155. Rolland cited valuation concerns for the downgrade. “Industry lead-times and valuation multiples have expanded to levels well beyond their historical averages, adding potential risk to this already volatile sector,” he said.

Elsewhere, the stock receives 16 ‘Buy’ ratings, 2 “Overweight’ ratings, 9 ‘Hold’ ratings, and 1 ‘Sell’ rating. Brokerage twelve-month price targets range from $122 to $200, with the median sitting at $170.

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Technical Outlook and Trading Tactics

Qualcomm shares have spent the past six weeks tracking along an uptrend line extending back to the March 2020 pandemic low. Furthermore, the price also finds support from the rising 200-day simple moving average (SMA).

Thursday’s expected rally from this level may act as a catalyst for the next significant move higher, possibly up to the all-time high (ATH) at $167.94. Those who take a trade here should minimize the downside with a stop-loss order placed beneath last week’s low at $132.47.

For a look at today’s earnings schedule, check out our earnings calendar.

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