Qualcomm Incorporated (Ticker Symbol: QCOMWealth Strength IndexAAPL is Extremely Up and trending Up) released quarterly revenues that beat analysts’ expectations as well as updating its guidance for the remainder of the year. The San Diego, Calif.-based company reported an earnings per share beat of .78 cents per share vs. Wall Street analysts’ expectations of .71 cents per share. Additionally, the tech giant reported a revenue beat of $4.8 billion vs. Wall Street analysts’ expectations of $4.7 billion. The American multinational semiconductor and telecommunications equipment company stated that the revenue results were helped by its patenting and licensing agreements, which generated $1.15 billion in revenue.
Qualcomm also adjusted its forecast for the rest of the year. The company will now be looking for its revenue to fall between $4.4 billion and $5.2 billion, which is right in line with the $4.8 billion in revenues that Wall Street analysts’ were expecting. Qualcomm is also forecasting that they will ship between 175 to 225 million 5G headsets next year. The company is planning on making money from the royalties because they own many of the 5G patents that manufacturers need to license the devices.
The above image is a chart of Qualcomm’s stock since the beginning of 2018. The stock had a negative start to the year and steadily drifted lower throughout the first quarter of 2018. After finding minor price support just under the $50 dollar level, Qualcomm began to rebound after a solid quarterly earnings report. The stock proceeded to drift higher into the beginning of the fourth quarter of 2018, finding some price resistance right around the $75.00 dollar level. Unfortunately for shareholders the stock took a turn lower and began to pull back over the course of the next six months.
While in the first quarter of 2019, the stock found a temporary bottom forming a bullish divergence pattern where the stock makes a lower low in price but the Relative Strength Index makes a higher low as indicated on the chart by the yellow lines. Traders and investors sometimes look at divergences for a possible pause within the current trend, which can, at times, lead to a reversal as occurred in Qualcomm’s case. Qualcomm proceeded to break through its downtrend and continued to rally over 60% before finding some resistance just below the $90.00 price level. The stock began to trade in a long-term triangle pattern, which it broke out from to the upside. Currently, the stock is trading above all of its major moving averages and is sitting just over 7% away from its all-time high.
(Chart above courtesy of www.tipranks.com)
Based on a survey of 16 analysts offering 12-month price targets, the average price target for Qualcomm’s stock is $95.20. According to that number, the stock is priced at a slight discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $91.35.
Investors in the space should look to Qualcomm’s next earnings release on January 31st for fresh news within the company.