Qualcomm is the IBD Stock Of The Day after the maker of wireless chips delivered a beat-and-raise quarterly report. QCOM stock dipped Thursday but found support at a key level.
The San Diego-based company late Wednesday said it earned an adjusted $3.23 a share on sales of $10.7 billion in its fiscal first quarter ended Dec. 26. Analysts had expected earnings of $3.01 a share on sales of $10.44 billion, according to FactSet. On a year-over-year basis, Qualcomm earnings rose 49% while sales climbed 30%.
For the current quarter, Qualcomm forecast adjusted earnings of $2.90 a share on sales of $10.6 billion. That's based on the midpoint of its outlook. Wall Street had predicted earnings of $2.51 a share on sales of $9.66 billion in the March quarter, FactSet said. In the year-earlier period, Qualcomm earned $1.90 a share on sales of $7.93 billion.
At least 10 Wall Street analysts raised their price targets on QCOM stock after the earnings report.
QCOM Stock Finding Support At 10-Week Line
At the opening bell on Thursday, QCOM stock jumped 2.1% to 192.09. But it soon reversed amid a broader sell-off among tech stocks. On the stock market today, QCOM stock dropped 4.8% to close at 179.10.
On Thursday, QCOM stock retreated to its 10-week moving average line, a key support level.
Qualcomm shares held up better than many peers during the recent market correction. Its relative strength line also is hitting new highs as QCOM stock consolidates.
On Nov. 5, Qualcomm stock touched a buy point of 168.04 out of a 40-week consolidation pattern, according to IBD MarketSmith charts. It decisively broke out on Nov. 15. QCOM stock hit a record high of 193.58 on Jan. 5 before pulling back.
QCOM stock might be forming a cup base, making it a stock to watch.
Qualcomm Stock Called A Top Pick
JPMorgan analyst Samik Chatterjee reiterated his overweight, or buy, rating on QCOM stock. He raised his price target on Qualcomm to 240 from 225 and called it a "top pick."
"Qualcomm's results and outlook brought forward further confirmation of the solid roadmap already laid out by the management team at the November analyst day," Chatterjee said in a note to clients. At that event, Qualcomm executives outlined the company's growth opportunities beyond smartphones and one-time key customer Apple.
Qualcomm is diversifying its business into chips for laptops, cars, Internet of Things, and computer headsets.
Rosenblatt Securities analyst Kevin Cassidy maintained his buy rating on QCOM stock and upped his price target to 225 from 220.
"Qualcomm is well positioned for another strong year of over 25% revenue growth and over 30% earnings growth," Cassidy said in his note to clients. "This will mainly be driven by increasing content per 5G handset and increasing 5G handset shipments."
Plus, the company is set up for longer-term growth in the automotive and IoT markets with its Snapdragon platform, Cassidy said.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
