Why Qualcomm (QCOM) Stock Is Falling Today

NEW YORK (TheStreet) -- Shares of Qualcomm Inc. (QCOM) are down -1.04% to $79.59 after Goldman Sachs (GS) removed the chip company from its "conviction buy" list and trimmed its revenue and near term earnings estimates for the June and September quarters, citing lower handset demand ahead of the Apple (AAPL) iPhone 6 launch.

For the June quarter, Goldman expects earnings per share of $1.23, down from $1.24, and revenue of $6.42 billion versus $6.53 billion. 

For the September quarter, the firm lowered earnings per share to $1.35 from $1.39, and expects revenue of $7.04 billion versus $7.15 billion.

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Goldman Sachs maintained its "buy" rating on Qualcomm and its $95 price target.

TheStreet Ratings team rates QUALCOMM INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate QUALCOMM INC (QCOM) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • QCOM's revenue growth has slightly outpaced the industry average of 2.5%. Since the same quarter one year prior, revenues slightly increased by 4.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • QCOM's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.19, which clearly demonstrates the ability to cover short-term cash needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Communications Equipment industry and the overall market, QUALCOMM INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 31.59% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, QCOM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • QUALCOMM INC has improved earnings per share by 7.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, QUALCOMM INC increased its bottom line by earning $3.91 versus $3.06 in the prior year. This year, the market expects an improvement in earnings ($5.18 versus $3.91).
  • You can view the full analysis from the report here: QCOM Ratings Report
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