Wells Fargo Expresses Caution Over Qualcomm - Read To Know - Qualcomm (NASDAQ:QCOM)

Wells Fargo analyst Gary Mobley expressed concern over weakening data points regarding smartphone demand for Qualcomm Inc's QCOM 3Q22 results and 4Q22 guide, despite QCOM's apparent Snapdragon market share gains at Samsung Electronics Co., Ltd. SSNNF and China brands and RFFE share gains.
He believed QCOM would report 3Q22 results roughly in line with consensus/guidance, with lower-than-expected units offset by continued pricing strength.
His 4Q22 revenue estimate is already 7.0% below consensus, and his FY23 revenue estimate is already 4% below consensus.
He modeled 24% and 4% rev growth for CY22 and CY23, respectively, assuming QCOM will grow faster than the mobile phone chip market and its automotive and IoT sales will beat the market.
The re-rating reflected QCOM's valuation and the company continuing to be a victim of its success.
He saw the need for anti-competitive regulatory compliance and an industrywide reluctance to rely too heavily on QCOM's MSM processors and related RF front-end (RFFE) solutions could constrain QCOM's ability to take the market share necessary to grow in a stagnant and mature smartphone market.
QCOM's valuation assumption represents a discount to its peers due to the presumed eventual loss of the Apple Inc AAPL baseband/RF business.
He found it difficult for QCOM shares to outperform peers based on constrained LT growth prospects specific to the mature mobile handset market, which still drives ~60% of QCT sales.
Mobley maintained an Equal Weight rating and a $135 price target (10.7% discount) on QCOM.
Price Action: QCOM shares traded higher by 2.59% at $151.18 on the last check Wednesday.

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Wells Fargo Expresses Caution Over Qualcomm - Read To Know

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