Qualcomm stock jumps more than 5% after earnings, forecast easily beat projections

Analysts on average expected adjusted earnings of $2.26 a share on sales of $8.85 billion, according to FactSet. Shares jumped more than 5% in after-hours trading immediately following the release of the results, after closing with a 2.4% gain at $138.48.

For the full year, Qualcomm reported that net income grew 74% to $9.04 billion and revenue increased 43% to $33.57 billion. Both annual totals were easily record highs, showing gains from the spread of 5G into more smartphones.

“As of fiscal 2021, we are exceeding our 2019 Analyst Day targets for revenue growth and diversification and operating margin expansion, while more than doubling our year-over-year non-GAAP EPS,” Chief Executive Cristiano Amon said in a statement, ahead of Qualcomm’s next analyst day on Nov. 16.

“I find it interesting that the company grew this much during a supply-constrained environment,” said Moor Insights & Strategy chief analyst Patrick Moorhead, referencing the semiconductor shortage. “Some have said that Qualcomm’s multi-foundry approach was too complex, but now it’s looking very smart.”

Qualcomm’s stock has lagged of late, falling 6.2% in the past three months as the S&P 500 index SPX, +0.65% gained 4.7%, amid concerns that Apple Inc.’s AAPL, +0.98% holiday concerns and overall soft smartphone sales, especially in China, could damage the mobile-chip specialist. But Bernstein analyst Stacy Rasgon said heading into the print that “things look OK at this point” for Qualcomm.

“Smartphones were down [year-over-year] in Q3 on industry constraints, but [quarter-over-quarter] appear roughly seasonal in Sept-Q (up MSD sequentially). A weak China is not new, & Qualcomm’s own supply constraints have reduced some exposure,” Rasgon, who has an outperform rating and $190 price target on the stock, wrote in a Monday note. “And while Apple themselves appears not immune to COVID’s supply-chain challenges, their guidance into Dec-Q was still relatively in-line with strong iPhone outlook even if constrained, with higher 5G mix.”

Qualcomm’s forecast suggested executives are not concerned about the smartphone market either. The company guided for first-quarter revenue of $10 billion to $10.8 billion and adjusted earnings of $2.90 to $3.10 a share, while analysts on average were expecting profit of $2.59 a share on sales of $9.66 billion, according to FactSet.