Qualcomm is set to release its Q2 FY’24 results on May 1, with revenue expected to be in the range of $8.9 billion to $9.7 billion and adjusted earnings projected at $2.20 to $2.40 per share. The company’s CDMA Technologies segment, which supplies technology for mobile devices, networking equipment, and consumer electronics, is expected to benefit from a growing smartphone market. Qualcomm’s revenue from handsets rose 16% year-over-year in Q1 FY’24, and the company has guided sales of between $1.2 billion to $1.4 billion for its technology licensing business. Additionally, Qualcomm’s automotive business is projected to gain traction as semiconductors play a larger role in the transportation industry.
Despite the overall growth in the smartphone market, Qualcomm’s stock has seen minimal movement, with little change from early January 2021 to the present. The stock has underperformed the S&P 500 index, with returns of 20% in 2021, -40% in 2022, and 32% in 2023. Comparatively, the S&P 500 saw returns of 27% in 2021, -19% in 2022, and 24% in 2023. The Trefis High Quality Portfolio, which includes 30 stocks, has consistently outperformed the S&P 500 over the same period, indicating that individual stocks have struggled to beat the index. With an uncertain macroeconomic environment and potential challenges ahead, investors are watching to see if Qualcomm can improve its performance and outshine the S&P 500.
Qualcomm’s stock currently trades at around 17x consensus 2024 earnings, which is considered a reasonable valuation. The modest growth projected for this year is expected to be followed by a recovery in sales in FY’25. The company’s extension of an agreement with Apple to supply modem chips until 2026 is a positive development, as Apple was expected to transition to internally developed 5G modem chipsets in 2024. Qualcomm’s stock has a price estimate of $146, slightly below the current market price. Analysts will revisit the price estimate following the release of the Q2 FY’24 results to assess the stock’s valuation and potential for growth.
As the smartphone market continues to grow and Qualcomm’s business segments show improvement, investors are hopeful for a positive outlook for the company. The rise in smartphone shipments and the increased role of semiconductors in the transportation industry present opportunities for Qualcomm to capitalize on these trends. With a reasonable valuation and potential for sales recovery in the future, Qualcomm’s stock may see further growth and attract investor interest. The company’s performance in the upcoming quarter will provide valuable insights into its ability to navigate challenges and deliver strong results in a competitive market.
