Qualcomm stock rallies as earnings, outlook top Street estimates

Qualcomm reported fiscal second-quarter net income of $1.76 billion, or $1.53 a share, compared with $468 million, or 41 cents a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation expenses and other items, were $1.90 a share, compared with 88 cents a share in the year-ago period. Revenue rose to $7.94 billion from $5.21 billion in the year-ago quarter.

Analysts surveyed by FactSet had forecast earnings of $1.67 a share on revenue of $7.62 billion, based on Qualcomm’s forecast of $1.55 to $1.75 a share on revenue of $7.2 billion to $8 billion.

“Demonstrating the strength of our strategy and our success in execution, we delivered another quarter of year-over-year growth driven by sustained demand for smartphones globally and our ability to increase the scale of our non-handset revenues,” said Steve Mollenkopf, Qualcomm’s outgoing chief executive, in a statement. “Looking ahead, Qualcomm is well positioned for continued growth, and we remain confident in our ability to execute on the many opportunities in front of us.”

In early January, Qualcomm said company president Cristiano Amon will succeed Mollenkopf as CEO on June 30.

Qualcomm said its wireless and mobile business, which includes 5G chips and sales for handsets, surged 53% from a year ago to $4.07 billion, while sales of chips for mobile-device antennas, or RF front-end products, rose 39% from the year-ago quarter to $903 million.

Qualcomm’s stock has suffered a few downgrades as of late. Most recently, Susquehanna Financial analyst Christopher Rolland downgraded Qualcomm’s stock to a neutral rating because “trusted contacts” have suggested Apple Inc. AAPL, -0.60% has increased its drive to become more independent in modem and RF components and a “revamped MediaTek 2454, +1.41% portfolio present major future risks” to Qualcomm. That follows a downgrade to an in-line rating from Evercore ISI analyst C.J. Muse, who said that most of the 5G smartphone upgrade cycle is already priced into Qualcomm’s stock and that competition is getting tougher.

Even so, Qualcomm forecast adjusted third-quarter earnings of $1.55 to $1.75 a share on revenue of $7.1 billion to $7.9 billion, while analysts were estimating $1.52 a share on revenue of $7.12 billion.

Over the past 12 months, Qualcomm shares are up 81%, compared with an 86% gain for the PHLX Semiconductor Index SOX, -1.46%,  a 46% rise by the S&P 500 index SPX, -0.08%, and a 63% gain by the tech-heavy Nasdaq Composite Index COMP, -0.28%.