NEW YORK (TheStreet) -- Shares of Qualcomm Inc. (QCOM) are down -5.85% to $76.83 in early market trading as the company was downgraded to "equal weight" from "overweight" at Evercore Partners (EVC) after its revenue outlook for the September quarter fell below analysts expectations.
Qualcomm said revenue in the fiscal fourth quarter would be between $6.5 billion and $7.4 billion, with a midpoint of about $6.95 billion, below analysts consensus estimate for fourth quarter revenue of $7.15 billion.
The mobile chipmaker reported its fiscal third quarter results yesterday, with net income of $2.24 billion, or $1.31 diluted earnings per share, which was above the midpoint of analyst estimates of between $1.15 and $1.25.
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The company reported revenue of $6.81 billion for the fiscal third quarter, up 9% from the previous year, beating analysts consensus estimate of $6.52 billion.
Separately, 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.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen 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 ($5.17 versus $3.91).
- You can view the full analysis from the report here: QCOM Ratings Report