Bernstein Lowers Qualcomm Price Target to $175

Bernstein SocGen Group analyst Stacy Rasgon lowered the price target on Qualcomm (NASDAQ: QCOM) to $175.00 (from $200.00) while maintaining an Outperform rating.

“QCOM’s FQ126 results were solid ($12.3B/$3.50 vs Street at $12.2B/$3.41) with the beat driven by QTL strength ($1.59B vs the Street at $1.50B) amid better smartphone shipments and mix.

QCT revenues were roughly inline with expectations ($10.6B vs Street at $10.6), with handsets and IoT roughly inline, and automotive above.

That this quarter would be a bit of a dog show was probably not a shock as increasing memory tightness has its way with smartphone builds.

The question will be when these constraints will ease given they will define the shape of shipments going forward, and unfortunately the general drivers in the memory space (lack of cleanrooms, pivots to HBM etc) might suggest the cycle has some duration. On the other hand, at least the company is cutting early and big, it seems that underlying demand remains strong, and the higher end (where QCOM overindexes) may be somewhat more insulated; it seems plausible that mix could continue to pivot upward as increasingly scarce memory chips are directed by the OEMs to more profitable platforms.

And the underlying dynamics actually look solid; chip gross margins seem fine, adjacencies (esp auto) are firing, option value exists. and the stock (even on lower numbers) remains incredibly cheap.”

This research note is reproduced verbatim from the issuing firm. Price Target never edits, paraphrases or alters analysts’ words — we only republish them in one place.