NEW YORK (TheStreet) -- Qualcomm (QCOM) - Get Free Report stock was added to the Bank of America/Merrill Lynch "US1 List" on Tuesday. The firm maintained its "buy" rating and $75 price target on the stock.
The San Diego-based company provides third-generation (3G), fourth-generation (4G) and next-generation wireless technologies. Though Qualcomm's fiscal 2015 fourth quarter earnings results missed expectations, its recent weakness presents a buying opportunity, Bank of America said.
"We believe Qualcomm is a long term beneficiary of growing 3G/4G smartphone, tablet and cellular enabled machine to machine adoption worldwide," the firm continued. "While QTL licensing revenues are decelerating, we expect the mix shift towards emerging markets to stabilize and the royalty rate to be supported for the foreseeable future as all-LTE and 5G networks are many years away."
Additionally, Qualcomm recently completed its acquisition of CSR, which will help the company compete in the Bluetooth market, the firm added.
Shares of Qualcomm were up by 0.50% to $49.21 in pre-market trading on Tuesday.
Separately, TheStreet Ratings team rates QUALCOMM INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate QUALCOMM INC (QCOM) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.16, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for QUALCOMM INC is rather high; currently it is at 64.70%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 19.46% is above that of the industry average.
- Net operating cash flow has slightly increased to $1,684.00 million or 4.01% when compared to the same quarter last year. Despite an increase in cash flow, QUALCOMM INC's average is still marginally south of the industry average growth rate of 4.02%.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 31.34%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 39.63% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Communications Equipment industry. The net income has significantly decreased by 43.9% when compared to the same quarter one year ago, falling from $1,894.00 million to $1,062.00 million.
- You can view the full analysis from the report here: QCOM
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.