Qualcomm Stock Expected To Fall As Apple Sales Decline: What's Going On?

QUALCOMM Inc QCOM shares are trading lower Monday following a downgrade from Wells Fargo.

What Happened: Wells Fargo analyst Gary Mobley downgraded Qualcomm from Equal-Weight to Underweight and announced a $105 price target, citing underperformance ahead of the company.

"Once investor sentiment toward the chip sector turns more positive, or once investors are convinced we've reached a trough in the chip cycle, we believe shares of companies w/high smartphone exposure should underperform the broader chip sector," Mobley wrote in a new note to clients.

The Wells Fargo analyst expects Qualcomm to trade at a discount to competitors as investors assign lower multiples to chip companies serving the mobile handset market. Furthermore, Wells Fargo anticipates a decline in sales to Apple Inc AAPL.

See Also: Why This Apple Analyst Sees Upside To iPhone Shipments In The Coming Months

The analyst expects Qualcomm to be left out of iPhone 16 models, leaving the company to depend on the premium-tier Android smartphone community, "which may not be the best exposure to have," Wells Fargo said.

Mobley expects Qualcomm's earnings to take a hit of approximately $1.25 per share related to the decline in Apple exposure. 

QCOM Price Action: Qualcomm has a 52-week high of $193.58 and a 52-week low of $101.93.

The stock was down 1.76% at $116.89 at time of publication, according to Benzinga Pro.

Photo: courtesy of Qualcomm.