Rosenblatt Assumes Qualcomm at Buy, $235 PT
Rosenblatt analyst Sajal Dogra assumes coverage on Qualcomm (NASDAQ: QCOM) with a Buy rating and a price target of $235.
“We are transferring coverage of QCOM to Sajal Dogra with a Buy Rating. Qualcomm guided EPS below consensus as near-term gross margin headwinds more than offset stronger revenue expectations.
Like a Sudoku puzzle, management provided enough pieces for investors to largely solve Qualcomm’s earnings algorithm.
While near-term visibility remains cloudy, we believe the earnings report represents a meaningful reset, with revenue growing sequentially through FY27.
Following the update, the long-feared Apple modem cliff is now substantially reflected in estimates.
The remaining debate centers on the pace of margin recovery.
Rising manufacturing and input costs, continued consumer headwinds within IoT, and the initial ramp of lower-margin Custom ASIC revenue are expected to pressure QCT gross margins by 150–200bps, while Qualcomm’s double-digit pricing actions will require several quarters to fully offset these headwinds.
That said, a China Android recovery driving >$1.50 in incremental EPS should offset a lot of the above.
While skepticism around Qualcomm’s latest data center ambitions is understandable given prior attempts, we would note that management has built a consistent track record of exceeding seemingly ambitious long-term targets.
Management’s Investor Day framework of >$40B in non-handset revenue and >$18 of EPS by FY29 fundamentally reshapes Qualcomm’s long-term financial profile.
Reflecting the margin headwinds, we lower our FY26/FY27 EPS estimates to $10.52/$10.42 from $10.75/$12.02. We lower our price target to $235 (from $265), based on 20x CY27 Non-GAAP EPS of $11.75.
We believe the stock is increasingly transitioning from an Apple replacement story to one centered on a edge and AI compute platform with a substantially higher growth trajectory and earnings power.
Reiterate Buy.”
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