Qualcomm announces to power Samsung Galaxy Note 7 following Q3 results, further attracting investors
QUALCOMM, Inc. (NASDAQ:QCOM) reported its 3QFY16 earnings on Wednesday, July 20. In its earnings, the company was able to beat the Street expectations. It reported $1.18 earnings per share and revenues of $6 billion against the consensus estimate of 98 cents in EPS and $5.6 billion in revenues. The company grew its revenues by 3.6% year-over-year and with this performance, it has set investors’ expectations even higher. Due to this, many investors have set high price targets set on the stock, the highest being $75, showing an increment of 21.28% over the average price target set by other investors.
With the issuance of its quarterly earnings, the company also released its fourth quarter guidance. It issued an estimate of EPS within the range of $1.05-1.15 and a revenue range of $5.4-6.2 billion. However, the Street has higher expectations from the company; it has set the EPS estimate at $1.09 and looks forward to the company posting revenues of $5.74 billion in 4QFY16.
Following these results, Qualcomm announced on Wednesday, August 03, that it would power the latest Samsung Galaxy Note 7. This is considered as the most intelligent smartphone by Samsung. The semiconductor developer is to reported to have given its Snapdragon 820 processer for the development of the smartphone. This processer would enable 4K video capturing and playback on Note 7 alongside supporting slow motion videos. Qualcomm Haven is also to be a part of the phone and would provide secured iris biometric scanning to enable user to use their eyes to unlock their phone or make mobile payments. The phone also includes Qualcomm Aqstic to provide users with high audio performance. The battery performance in Samsung phone would also be made better using Qualcomm technologies. The phone is expected to release later in August in four colors: Gold Platinum, Blue Coral, Black Onyx, and Silver Titanium.
Furthermore, Qualcomm announced licensing agreement with Chinese company, OPPO Mobile Telecommunications. This agreement is said to be a great step towards achieving Chinese loyalty. This would secure over 75% of its global sales from Chinese OEMs. Improving terms in China is important to the mobile-chip maker as they make up to one-third of its revenues and approximately three-quarters of its annual profits. Following this, Morgan Stanley analyst James Faucette restated his Overweight rating on the stock. He maintained a price target at $65.
Not only this, the $88.09 billion company continues to impress other analysts as well. With a tablet and 60 seconds, Qualcomm technology was able create a 3D model of one the analysts on Monday, August 01. The company official walked around him using a tablet, the laser transmitter and the IR receiver on it gathered data to create the model. The technology was successful in taking accurate in-depth scans that are necessary for replicating all the facial features. The information attained by the receivers and the camera is then combined to form a rendered and color-corrected model that can be used for editing as well as animation of any sort.
With these developments, Qualcomm stock is trading up in the market at 22.05% year-to-date, alongside Samsung, which is trading up 20.62% on YTD basis. The stock has outperformed the market indexes, Nasdaq and Dow Jones, which are trading up 3.02% and 5.33% respectively, on YTD basis.
The analysts remain bullish on the stock. FactSet Fundamentals maintains that the consensus has 13 Buy, one Overweight, 16 Hold, and one Sell ratings on the stock. The stock is traded between the daily range of $60.5-61.11 and 52-week range of $42.24-64.82. The company has a total of 1.47 billion shares outstanding in the market, out of which 6.45 million trade in active-market sessions. The consensus price target stands at $61.84, depicting an increase of 1.36% over the last close.