'The Hard Reset': 3 Qualcomm Analysts Slash Price Targets After Guidance Miss

Qualcomm, Inc. QCOM reported a revenue beat for its fiscal fourth quarter, but announced earnings in-line with expectations and guidance that missed Street expectations.

Morgan Stanley On Qualcomm

Analyst Joseph Moore maintained an Overweight rating on Qualcomm while reducing the price target from $147 to $126.

“While numbers YTD have been solid, it has been increasingly obvious that there would be an inventory correction,” Moore said. The recent sell-off in the stock reflects “investor concerns about near term numbers,” he added.

“The magnitude of the shortfall was much more severe than our expectations, which is in some ways a positive, as the company chooses decisive actions to draw down inventory instead of smaller lingering cuts; but we are also mindful that this excess inventory likely built YTD, overstating the reference point, and are budgeting for the impact to be less surgical than guidance suggests,” the analyst further wrote.

Check out other analyst stock ratings.

Raymond James On Qualcomm

Analyst Melissa Fairbanks reiterated a Strong Buy rating while lowering the price target from $190 to $150.

“We got the hard reset that we believe investors were hoping for, but not out of an abundance of caution – but rather because demand from their largest handset customers rapidly deteriorated, and the company is facing a sharp inventory overhang that will impact near-term results by $2.0 billion and ~$0.80 in EPS,” Fairbanks wrote in a note.

Excess inventory could continue to exert pressure until channel inventories normalize, “which we expect beginning in mid-2023,” she added.

Rosenblatt Securities On Qualcomm

Analyst Kevin Cassidy reaffirmed a Buy rating while slashing the price target from $220 to $170.

Apart from the impact of excess inventory, macro headwinds are lowering demand in the company’s IoT business, Cassidy said. “We continue to view Qualcomm as having all the key technologies to benefit the multiple secular growth drivers longer-term,” he added.

QCOM Price Action: Shares of Qualcomm were down 7.67% at $103.87 midday Thursday.

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