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Qualcomm Inc. (QCOM) is a semiconductor company that designs, develops, and markets wireless telecommunication products, integrated circuit systems, and system software. Its list of offerings includes radio frequency transceivers, cellular modems, application processors, consumer wireless devices, and wireless connectivity integrated circuits.
Valued at roughly $200 billion by market cap, QCOM's products are used in mobile phones, tablets, laptops, cameras, wireless devices and network infrastructure equipment, music and voice gateway, IoT devices, and more.
Qualcomm stock has outperformed the broader equities market in 2024, delivering a YTD return of 23.5%. Over the past 52 weeks, QCOM has surged 37.9%.
However, with shares of the semiconductor stock down more than 20% from their mid-June highs, it's possible to buy the dip in QCOM at current prices.
In fact, ahead of Qualcomm's July 31 earnings report, one analyst suggests scooping up the stock as a “Top Pick” for up to 40% upside potential.
Qualcomm Reports Solid Q2 Earnings
Back on May 1, the company reported its fiscal Q2 results, which beat Wall Street's expectations and caused the stock to pop 9.74% on the day.
Qualcomm reported Q2 revenue of $9.39 billion against analysts' $9.32 billion estimate, while adjusted EPS of $2.44 also beat the expected $2.30. Gross margin for the quarter improved to 56.3% from 55.2% in the year-ago period.
The company also significantly improved its free cash flow, which rose 23.2% sequentially to $3.37 billion.
Management issued revenue guidance in the range of $8.8 billion to $9.6 billion, which translated to a midpoint of $9.2 billion for Q3 - above analyst’s $9.02 billion estimate at the time.
This week, Qualcomm is scheduled to release its fiscal third-quarter earnings after the market closes on Wednesday, July 31. Analysts are looking for a GAAP profit of $1.72 per share, or $2.26 on an adjusted basis, with revenue expected at $9.22 billion.
Qualcomm is a Top Pick at Baird
Analysts are optimistic about the stock, as indicated by the consensus “Moderate Buy” rating among 29 experts in coverage.
QCOM has 17 “Strong Buy” ratings, 1 “Moderate Buy” rating, 10 “Holds,” and 1 “Strong Sell.”
Recently, the semiconductor stock received “Top Pick” status at Baird, which also raised its price target from $200 to $250, signifying expected upside potential of 40.8% from current price levels.
Baird analyst Tristan Gerra has high hopes for Qualcomm's second-half results, writing in a note to clients, "We believe AI will drive double-digit increases in Qualcomm's ASPs for various components starting this 2H, along with market share and content gains." The analyst added, "Channel feedback also points to above-expectation initial shipments of X Elite for Copilot+ PCs."
Wall Street's average price target for QCOM stock is $206.45, about 17% north of current prices.
On the date of publication, Ruchi Gupta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
