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Should You Buy or Sell Qualcomm Stock Right Now?

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Broader markets rose on Tuesday due to expectations that the Trump administration would introduce stimulus measures to deal with the economic slowdown from the coronavirus outbreak. The S&P 500 and the Dow Jones Industrial Average rose 4.94% and 4.89%, respectively. Qualcomm (NASDAQ:QCOM) stock closed 8.60% higher at $78.89 with a market cap of about $90.2 billion.

Qualcomm stock rose after the tech giant announced a dividend increase. Read Qualcomm Lifts Its Dividend amid Coronavirus Risk to learn more.

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Analysts’ recommendations for Qualcomm stock

According to the latest recommendations from 30 brokerage firms surveyed by Reuters, 18 of the analysts recommend a “buy,” while 12 recommend a “hold.” None of the analysts covering the stock recommend a “sell.”

Analysts have an average target price of $98.70 on Qualcomm. The target price implies a return of 25.1% based on the closing price of $78.89 on Tuesday. The consensus target price for the stock fell from $101.31 in February. The lowest target price estimate is $80, while the highest is $115.00.

On Tuesday, RBC Capital analyst Mitch Steves decreased its target price from $92 to $81 on Qualcomm stock. The analyst reiterated his “sector perform” rating on the stock. According to TheFly report, “The analyst notes that while the company has not issued a negative pre-announcement, its results will likely track toward the lower end of prior guidance given the disruptions in the global smartphone supply chain impacting the March quarter as well as the upcoming fiscal year guidance.” The report also said, “Steves is also cutting his FY20 and FY21 EPS views by 20c and 75c respectively to $3.95 and $5.25 while acknowledging some signs of improvement in the Chinese supply chain.”

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Nomura Instinet analyst David Wong initiated coverage on Qualcomm stock with a “buy” rating and a target price of $98. According to a MarketWatch report, “The leading smartphone makers in the world, including Apple, Samsung, Xiaomi, OPPO, and Vivo use Qualcomm’s modems in some of their current or upcoming 5G phones.” The report also said, “Qualcomm expects its 5G-related dollar content opportunity to be around 1.5x what it was at the 4G level.”

Intel (NASDAQ:INTC) and Nvidia’s (NASDAQ:NVDA) have average broker target prices of $65.48 and $303.15, respectively. The figures imply returns of 21.3% and 16.1%, respectively, over the next 12 months.

Financial performance

Qualcomm’s net revenue rose 5.0% YoY (year-over-year) to $5.1 billion in the first quarter of fiscal 2020. Wall Street analysts expected revenues of $4.83 billion. The company’s QTL (Qualcomm Technology Licensing) segment reported revenues of $1.4 billion—a rise of 37.9% YoY. Meanwhile, the company’s QCT (Qualcomm CDMA Technologies) segment reported revenues of $3.6 billion—a fall of 3.2% YoY. Qualcomm’s adjusted EPS was $0.99 in the first quarter of fiscal 2020, which was better than analysts’ consensus expectation of $0.85.

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Analysts expect Qualcomm’s revenues to rise by 14.1% in fiscal 2020 to $22.1 billion. The sales will likely rise by 24.7% in fiscal 2021 to $27.6 billion. The adjusted earnings will likely rise by about 16.7% in fiscal 2020 to $4.13 per share. However, the profits will likely rise by 47.5% YoY to $6.09 per share in fiscal 2021.

Technical indicators

Currently, Qualcomm stock is trading 18.0% below its 52-week high of $96.17 on January 17. The stock is also trading 43.7% above its 52-week low of $54.92 on March 15, 2019. On a YTD (year-to-date) basis, the stock has fallen by 10.6% as of Tuesday. In comparison, the broader S&P 500 Index has fallen 10.8% YTD.

On Tuesday, Qualcomm stock was trading 5.1% below its 20-day moving average of $83.15. Meanwhile, the stock was trading 9.3% below its 50-day moving average of $86.94 and 8.3% below its 100-day moving average of $86.04. The stock’s 14-day relative strength index score of 44 shows that it isn’t “oversold” or “overbought.”

Qualcomm has an upper Bollinger Band level of $94.51. The company’s middle Bollinger Band level is $83.15, while its lower Bollinger Band level is $71.79. On Tuesday, the stock closed near its middle Bollinger Band level, which also shows that the stock is neutral.

Qualcomm stock fell by 3.8% in today’s pre-market trading session as of 8:55 AM ET. Read Coronavirus Derails Qualcomm’s Rally, Stock Falls to learn more.

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