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Are Legal Headwinds Clouding Qualcomm’s Earnings Potential?

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Part 21
Are Legal Headwinds Clouding Qualcomm’s Earnings Potential? PART 21 OF 22

A Look at Qualcomm’s Stock Price Momentum

Qualcomm’s technical analysis

Qualcomm (QCOM) stock has moved in the opposite direction compared to other semiconductor stocks as its lawsuit with Apple (AAPL) has eclipsed the strong growth in its chipset business. Most investors are pessimistic about the outcome of the lawsuit, whereas analysts have mixed opinions about Qualcomm.

All these factors have negatively affected Qualcomm’s stock price. Let’s look at the technical indicators and understand the momentum of the stock.

A Look at Qualcomm’s Stock Price Momentum

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Qualcomm’s stock price momentum

In technical analysis, short-term and long-term moving averages play key roles. When a short-term moving average is higher than a long-term moving average, it shows technical strength and indicates positive investor sentiments.

Qualcomm has a 50-day moving average of $57 and a 100-day moving average of $56, which shows that the stock is moving within the $50 range with no significant upside or downside movements. NXP Semiconductors (NXPI) has similar momentum with its 50-day moving average of $109, which is slightly above its 100-day moving average of $107.

Stronger momentum is visible in Broadcom stock (AVGO). Its 50-day moving average of $243 is moderately higher than its 100-day moving average of $232.

Current stock price

Another way of assessing moving averages is by comparing them with a stock’s current price. Qualcomm’s current stock price of $53 is lower than its 50-day and 100-day moving averages, whereas NXP’s and Intel’s (INTC) stock prices are in line with their 50-day and 100-day moving averages. Only Broadcom is trading above its 50-day and 100-day moving averages. This shows weakness in Qualcomm’s stock price momentum.

RSI

The RSI (relative strength index) is a technical indicator that measures the intensity of investors’ sentiments. The RSI is measured on a scale of 0 to 100, with less than 30 indicating that a stock is oversold and more than 70 indicating that a stock is overbought.

On July 24, 2017, Qualcomm’s 14-day RSI stood at 39, indicating that the stock was close to being undersold. On the other hand, Broadcom’s and Intel’s 14-day RSIs were above 70, and NXP’s RSI was close to 70.

According to the technical indicators, Qualcomm’s falling stock price has made it cheap, and it could be a good buy for those who are optimistic about its future growth potential. Next, we’ll compare Qualcomm’s fundamentals with its stock price and look at its long-term growth potential.

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