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What to Expect from Qualcomm’s Q2 Earnings

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Apr. 28 2020, Published 8:18 a.m. ET

Qualcomm (NASDAQ:QCOM) stock fell 0.1% on Monday and closed at $75.98. The stock was trading 21.0% below its 52-week high of $96.17. Meanwhile, the stock was trading 31.0% above its 52-week low of $58.00. At the closing price on Monday, Qualcomm had a market capitalization of $86.8 billion.

Qualcomm stock has lost 12.3% in the last 12 months. In comparison, the S&P 500 Index has fallen by 2.2%. Advanced Micro Devices (NYSE:AMD) and Nvidia (NASDAQ:NVDA) have gained 104.5% and 64.1%, respectively. Intel (NASDAQ:INTC), Micron Technology (NASDAQ:MU), and Broadcom have returned 16.5%, 7.7%, and -15.7%, respectively.

What can investors expect from Qualcomm’s second-quarter results? The technology company will likely report its earnings results for the March ended quarter on Wednesday after the closing bell.

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Qualcomm’s Q2 earnings expectations

Wall Street analysts expect Qualcomm to post sales of $5.0 billion in the second quarter—a rise of 2.9% YoY (year-over-year) compared to $4.9 billion in the second quarter of fiscal 2019. Also, analysts expect the company’s adjusted EPS to rise by 2.6% YoY to $0.79 in the second quarter.

Qualcomm’s free cash flow will likely decline to $390 million from $624 million a year ago. The company’s operating cash flow could fall 12% YoY to $699 million. Meanwhile, the company’s capital expenditures could increase by 31% YoY to $222 million in the second quarter. Qualcomm will likely return $716 million to shareholders in the form of dividends. On Monday, the company’s dividend yield was 3.42%.

Analysts also expect Qualcomm’s revenues to rise by 9.7% YoY in fiscal 2020 to $21.3 billion. The sales could rise by 25.8% YoY in fiscal 2021 to $26.8 billion. The adjusted earnings will likely to rise by 9.3% in fiscal 2020 to $3.87 per share. However, the profits could rise by 51.2% YoY to $5.85 per share in fiscal 2021.

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Analysts’ recommendations and target price

Qualcomm stock is tracked by 31 Wall Street analysts. Among the analysts, 19 recommend a “buy,” ten recommend a “hold,” and two recommend a “sell.” Analysts’ mean target price on the stock is $89.86, which implies an 18.3% gain from the current level of $75.98. The consensus target price for the stock has fallen from $94.28 in March—a fall of 4.7%.

Technical analysis

Based on the closing price on Monday, Qualcomm stock was trading 4.7% above its 20-day moving average of $72.55. The stock is also trading 2.5% above its 50-day moving average of $74.13 and 6.6% below its 100-day moving average of $81.32.

Qualcomm’s 14-day RSI (relative strength index) number is 54. The number indicates that the stock isn’t oversold or overbought. Qualcomm’s lower, middle, and upper Bollinger Band levels are $65.31, $72.55, and $79.78, respectively. On Monday, the stock closed near its middle Bollinger Band level, which indicates that it isn’t oversold or overbought.

As of Monday, Qualcomm was trading at 19.64x analysts’ fiscal 2020 adjusted EPS estimate of $3.87 and at 13.00x analysts’ fiscal 2021 adjusted EPS estimate of $5.85. Analysts expect the company’s adjusted EPS to rise by 9.3% YoY in fiscal 2020 and 51.2% YoY in fiscal 2021. They also expect Qualcomm’s earnings to rise at a CAGR of 24% in the next five years.

Read Coronavirus Derails Qualcomm’s Rally, Stock Falls and Google Increases Custom Chip Efforts, Puts Qualcomm on Notice to learn more.

Stay tuned to learn how Qualcomm performed in the second quarter of fiscal 2020.

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