Goldman analysts expressed concern about chip demand from smartphone makers due to the coronavirus pandemic.
Qualcomm, San Diego, designs and markets semiconductors mostly for mobile-communications equipment.
“[Weakening] smartphone demand negatively impacts both the [Qualcomm CDMA Technologies] and [Qualcomm Technology Licensing] segments and drives earnings below consensus for 2020 and 2021,” the Goldman analysts, led by Rod Hall, wrote in a report.
“We are reducing our calendar year 2020 and 2021 3G/4G units estimate by 12.5% and 10.0%, respectively, … due to the anticipated impacts from covid-19 and weakening consumer confidence, which we believe reduces smartphone replacement rates.”
These reduced estimates led the Goldman analysts to cut their 2021 earnings per share forecast by 10% to $5.04, putting them 16% below consensus, they said.
The analysts slashed their share-price target for Qualcomm to $61 from $77, using a price-to-earnings multiple of 12. The previous target was based on a 13.6 multiple.
“We are reducing our assumed multiple to reflect materially increased earnings uncertainty, as we now forecast much lower smartphone demand and see risk to QCOM content in higher-end devices,” the analysts wrote
Qualcomm shares recently traded at $76.31, down 0.7%, while the S&P 500 was up 1.5%. The stock has slid 17% in the past three months, compared with a 15% drop for the S&P 500.