Here’s what Wall Street is saying about Qualcomm ahead of earnings

Qualcomm (QCOM) is scheduled to report results of its fiscal third quarter after the market closes on July 31 with a conference call scheduled for 4:45 pm ET. What to watch for:

GUIDANCE: Along with its last report, Qualcomm guided for Q3 adjusted earnings per share of $2.15-$2.35 on revenue of $8.8B-$9.6B. At the time, analysts were expecting the company to report Q3 EPS of $2.16 on revenue of $9.08B, but those figures have since risen to $2.25 and $9.22B, respectively.

BAIRD’S ‘BULLISH FRESH PICK’: Last week, Baird raised the firm’s price target on Qualcomm to $250 from $200 and maintained an Outperform rating on the shares, which the firm added as a “Bullish Fresh Pick.” Initial channel feedback points to a 90M-plus procurement units estimate for the upcoming iPhone 16 and channel feedback also points to above-expectation initial shipments of X Elite for Copilot+ PCs, said the firm, which believes that AI will drive double-digit increases in Qualcomm’s average selling prices for various components starting in the second half.

PT HIKES: In recent weeks, multiple securities analysts raised their price targets on Qualcomm, starting with KeyBanc, which raised its price target on the stock to $225 from $205 with an Overweight rating. KeyBanc sees negative near-term implications including China Android smartphone demand getting weaker, as iPhone demand strengthens and gains share, and as customer component inventory is high, and as a result, the firm sees near-term risk to Handset estimates, the analyst tells investors in a research note. The firm also sees tailwinds at Samsung (SSNLF) and expects Qualcomm to regain 100% share on the GS25, which should add an incremental $1.6B in revenues generation-to-generation.

Meanwhile, Citi analyst Christopher Danely raised the firm’s price target on Qualcomm to $200 from $170 and kept a Neutral rating on the shares. The analyst expects the Q2 earnings season to be a positive catalyst for the semiconductor space with aggregate estimates moving higher driven by artificial intelligence strength, stabilization in the PC, wireless and data center end markets, along with better prints and guides from analog companies as the industrial end market undergoes inventory replenishment. Although valuations are high, the sector can continue to move higher, the analyst tells investors in a research note. Citi increased estimates for Qualcomm and added that Micron (MU) remains its top pick.

Additionally, Susquehanna raised the firm’s price target on Qualcomm to $250 from $205 and reiterated a Positive rating on the shares as part of a Q2 earnings preview for the semiconductor group. The firm expects “continued broad-based headwinds,” but says they will be uneven as different markets progress at different stages of the downcycle. For personal computers, Susquehanna slightly raised 2024 notebook builds and sell-through, saying Q2 finished better than expectations, though it continues to believe that artificial intelligence PCs will not drive a meaningful acceleration in the second half of 2024. For Handsets, the analyst is forecasting smartphone shipments to increase 4.5% in 2024 to 1.2B units, slightly higher than prior as the firm’s Q2 checks came in stronger than expectations.

ELECTION IMPLICATIONS: Earlier this month, Bloomberg reported that the Biden administration is considering a wide-sweeping crackdown to clamp down on companies exporting their chipmaking equipment to China if companies such as Tokyo Electron (TOELY) and ASML (ASML) continue giving the country access to advanced semiconductor technology. According to people familiar with the matter, the U.S. is considering whether to impose a measure called the foreign direct product rule, which lets the country impose controls on foreign-made products that use even the tiniest amount of American technology. Qualcomm was among chip stocks at the time moving lower after the news.

Meanwhile, former president and current presidential candidate Donald Trump said around the same time that Taiwan should pay the U.S. for defense, in an interview with Bloomberg Businessweek published on Tuesday. The former president also claimed Taiwan took “about 100%” of America’s semiconductor business.