Qualcomm Share Forecast February 2022 – Time to Buy QCOM?
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Shares of American multinational corporation Qualcomm (NASDAQ: QCOM) are in the red today, after closing at $175.09 as of February 7th (19:59 EST). On 2nd February, the company recently posted a strong first-quarter report along with good guidance for its second quarter. While the numbers were rock solid, they didn’t provide a meaningful boost to Qualcomm shares.
Qualcomm – Technical Analysis
According to Qualcomm’s financial statement, the market cap of the company is at $197.326 billion with total assets worth $42.82 billion. Revenue for 2021 was at $33.57 billion with a profit margin of 26.94% compared to $23.53 billion in 2020. Qualcomm’s revenue surged 30% year over year to $10.7 billion, which cleared estimates by $270 million. Adjusted net income for Qualcomm increased by 47% to $3.7 billion, or $3.23 per share, which also beat expectations by $0.23. Management expects revenue and adjusted EPS to improve by 20% and 31% respectively.
Moving averages such as Exponential Moving Average (20)(176.23), Simple Moving Average (20)(175.61), Exponential Moving Average (30)(176.41) and Simple Moving Average (30) (178.71) are indicating a buy action. On the other hand, oscillators such as Stochastic RSI Fast (3, 3, 14, 14)(64.72), Williams Percent Range (14)(−48.99), Bull Bear Power(3.20), and Ultimate Oscillator (7, 14, 28)(56.03) are neutral.
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Recent Developments
Qualcomm has two main businesses – a chipmaking (QCT) segment, and a licensing (QTL) segment. While the former produces its flagship Snapdragon system-on-chips (SoCs), the latter generates licensing revenue and royalties from its massive portfolio of wireless patents. The QCT segment accounted for 83% of the company’s revenue in the first quarter of 2022. This included 68% revenue from the smartphone market during the first quarter while the rest came from its RF front-end chips (13%), automotive chips (3%), and Internet of Things (IoT) (17%) chips.
As a result of its brisk sales of Snapdragon SoCs, Qualcomm’s smartphone chip sales rose by 42% year over year. Its RF front-end revenue increased by 7%. The company’s automotive revenue grew 21% as it sold more chips for telematics platforms, digital cockpits, and advanced driver-assistance systems. Defiant OEMs as well as government regulators have previously attacked Qualcomm’s QTL business. But the company has settled most of those disputes and has continued to expand as it collected fresh licensing revenue from new 5G devices.
While the company’s revenue growth is decelerating, it is still being able to generate strong double-digit percentage sales growth on top of its double-digit percentage sales growth in 2021 due to growth of the 5G, connected vehicle, industrial, and IoT markets. While the company faces some supply bottlenecks related to the ongoing chip shortage, management expects those headwinds to ease in the second half of 2022.
Should You Buy QCOM Shares?
The company’s management expects EBT margins to dip sequentially. But they also expect it to expand year over year to 32%-34% for the QCT segment and 70%-74% for the QTL segment. The company is known for consistently returning its free cash flow to investors through buybacks and dividends. Qualcomm is paying a decent forward yield of1.5% and has reduced its number of outstanding shares by 24% over the past three years.
The financial discipline exercised by Qualcomm makes it an attractive “safe haven” stock to buy during these volatile times. Its margins are expanding and it is gradually expanding into new markets. Compared to many of its peers, it trades at a discount. While it’s not as exciting as the market’s other high-growth stocks, it can add a lot of stability to any portfolio to cope with this unpredictable market.
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