Qualcomm shares fall 7% on continued smartphone weakness; analysts lower numbers

Qualcomm (NASDAQ:) shares are trading nearly 7% lower following the company’s reported FQ2 results.

While of $2.15 was in-line with expectations and revenue of $9.27 billion (down 17% year-over-year) beat the consensus estimate of $9.09B, Q3 guidance missed expectations. QCT segment revenue was down 17% year-over-year to $7.9B, and QTL segment revenue fell 18% to $1.3B.

Demand for smartphones has deteriorated as China remains weak.

“As we navigate this challenging environment, we remain focused on the critical factors we can control to emerge stronger from this downturn – our leading technology roadmap, best-in-class product portfolio, strong customer relationships and operational efficiencies,” said CEO Cristiano Amon.

The company expects 3Q23 EPS in the range of $1.70-$1.90, compared to the consensus of $2.20, and revenue in the range of $8.1-8.9B, compared to the consensus of $9.25B.

Mizuho analysts cut the price target by $10 to $140 per share.

“We see potential for outperformance with a lowered 5G expectation, any potential China demand rebound, and further share gain at Samsung/Android customers,” they said in a note.

Deutsche Bank analysts also cut the price target as they went to $130 from the prior $150 per share.

“While QCOM’s guide was disappointing by any measure, we commend the co’s more realistic commentary on C2H23 (compared with other co’s building in a large snapback), and thus believe the co should be an attractive beneficiary of the eventual cyclical rebound once one actually occurs (not a matter of if, but rather when). On lower estimates, we maintain our Buy rating but lower our P/T,” they wrote.

Additional reporting by Senad Karaahmetovic