TLDR:
- QCOM stock has been upgraded to Zacks Rank #2 (Buy)
- Earnings expected to grow 15.3% year-over-year to $11.78 per share for fiscal 2025
- Stock returned -18.6% over past month while broader semiconductor industry lost 22.2%
- Consensus sales estimate for current quarter: $10.6 billion, up 12.9% year-over-year
- Last quarter showed strong performance with 17.5% revenue growth and 16.38% EPS surprise
Qualcomm stock is attracting investors’ attention following its recent upgrade to a Buy rating from Zacks. The semiconductor giant has shown resilience in a challenging market, with analysts raising earnings estimates despite recent market volatility.
The chipmaker’s shares have declined 18.6% over the past month. This drop is less severe than the 22.2% loss seen across the broader electronics-semiconductors industry during the same period. The S&P 500 composite showed a 13.5% decline.
QUALCOMM Incorporated (QCOM)
Earnings estimate revisions often drive stock performance. Qualcomm’s improving earnings outlook has been a key factor in its upgraded rating.
For the current quarter, Qualcomm is projected to post earnings of $2.79 per share. This represents a 14.3% increase from the same quarter last year.
Strong Financial Projections
The company’s fiscal outlook continues to strengthen. Analysts forecast earnings of $11.78 per share for the current fiscal year, indicating a healthy 15.3% year-over-year growth rate.
This estimate has improved by 0.2% over the past 30 days. Looking further ahead, the consensus estimate for the next fiscal year stands at $12.50 per share, projecting an additional 6.1% growth.
Revenue growth parallels these positive earnings trends. The consensus sales estimate for the current quarter is $10.6 billion, representing a year-over-year increase of 12.9%.
For the full fiscal years, analysts project revenues of $43.34 billion for the current year and $45.41 billion for the next. These figures represent growth of 11.3% and 4.8%, respectively.
Recent Performance Exceeds Expectations
Qualcomm’s most recent quarterly results exceeded market expectations. The company reported revenues of $11.67 billion, representing a 17.5% year-over-year increase.
This impressive performance surpassed the Zacks Consensus Estimate of $10.92 billion by 6.87%. Earnings per share reached $3.41, compared to $2.75 in the same period last year.
The earnings surprise was substantial at 16.38%. Notably, Qualcomm has beaten consensus EPS estimates in each of the past four quarters.
The company has also consistently exceeded revenue projections during this period. This track record of outperformance strengthens the case for the recent rating upgrade.
Valuation metrics suggest Qualcomm may be trading at attractive levels relative to its peers. The company received a B grade on Zacks Value Style Score, indicating it may be undervalued compared to industry competitors.
The Zacks rating system maintains a balanced approach to stock evaluation. Only the top 5% of covered stocks receive a “Strong Buy” rating, with the next 15% earning a “Buy” rating.
Qualcomm’s placement in this top 20% highlights its superior earnings revision profile. This makes it a solid candidate for potentially market-beating returns in the near term.
Institutional investors often use earnings estimates to calculate a company’s fair value. Rising estimates typically lead to higher valuations, potentially driving share prices upward as institutions adjust their positions.
The correlation between earnings estimate revisions and near-term stock movements is well-established through empirical research. Qualcomm’s positive trend in this area supports the upgrade to Buy status.
Analysts have steadily raised their estimates for Qualcomm over recent months. During the past three months alone, the Zacks Consensus Estimate has increased by 3.7%.
The Zacks Rank relies primarily on a company’s changing earnings picture rather than subjective factors. This makes it a useful tool for individual investors seeking objective guidance.
Qualcomm received its Buy rating largely due to the size of recent changes in consensus estimates, along with other earnings-related factors that suggest positive momentum.