Chipmaker Qualcomm (NASDAQ:QCOM) is downsizing its workforce in response to the sluggish demand for its products. Per a Bloomberg report, the company is cutting 1,258 jobs in San Diego and Santa Clara, California. These workforce reductions are slated to commence around mid-December.
Qualcomm is facing challenges due to the continued slowdown in the Chinese market and macroeconomic headwinds, affecting the demand for its handset business. The company’s handset revenue experienced a decline of 25% year-over-year in the third quarter of Fiscal 2023. Additionally, its overall sales and adjusted earnings per share decreased by 23% and 27%, respectively, in Q3.
As the company awaits a rebound in demand, it is focusing on reducing its operating expenses. During the Q3 conference call, the company’s CFO, Akash Palkhiwala, said that QCOM has implemented cost-saving initiatives and is well-positioned to surpass its target of achieving a 5% reduction in expenses. Palkhiwala added that the company intends to introduce further cost-saving measures in the first half of Fiscal 2024.
Amid challenges, Qualcomm will report its fourth-quarter earnings on November 1. Wall Street analysts expect QCOM to post earnings of $1.91 per share, reflecting a significant drop from EPS of $3.13 in the prior-year quarter. With this backdrop, let’s look at what the Street recommends for QCOM stock.
What is the Prediction for Qualcomm Stock?
Given the soft demand environment, analysts are cautiously optimistic about Qualcomm stock. With 14 Buy, five Hold, and one Sell recommendations, QCOM stock has a Moderate Buy consensus rating. At the same time, analysts’ average price target of $135.35 implies 21.44% upside potential from current levels.
