One Reason Qualcomm (QCOM) Stock Is Falling Today

NEW YORK (TheStreet) -- Shares of Qualcomm Inc. (QCOM) are down 7.11% to $71.71 in pre-market trading on Thursday after the company's price target was cut at Barclays and Sterne Agee.

Barclays lowered the price target to $80 from $85 for the American global semiconductor company and maintained its "overweight" rating.

The firm said that results and guidance were below Street estimates, and uncertainty on China royalty collections continues.  Barclays said to expect clarity in two weeks at the company's analyst day.

"What went wrong this quarter could fill more than this page, but at the end of the day, the company expects collection issues to ease to some degree next year and in the meantime, the company holds roughly 1/4th its value in cash, continues to buy back stock at a good clip, and with the analyst day coming in 2 weeks we expect better clarity on its market assumptions and capital allocation plans," said Barclays U.S. Semiconductors analyst Blayne Curtis.

Sterne Agee set a price target of $82 for Qualcomm, and lowered annual EPS estimates to $5.24 from $5.96 for fiscal 2015.

The firm said it reiterated its "buy" rating of the company given challenges in China and Europe.

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, increase in stock price during the past year and growth in earnings per share. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

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

  • The revenue growth came in higher than the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 9.0%. Growth in the company's revenue appears to have helped boost 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 3.36, 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.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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 45.5% 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 ($5.32 versus $3.91).
  • You can view the full analysis from the report here: QCOM Ratings Report
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