Options activity in QCOM explodes, should you follow the bulls?

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QUALCOMM Incorporated (COMQ) manufactures semiconductors and core technologies for the wireless industry worldwide. It operates through three segments: Qualcomm CDMA Technologies; Qualcomm technology license; and Qualcomm Strategic Initiatives. The company has an ISS Governance QualityScore of 3, indicating relatively low governance risk.

QCOM shares jumped intraday last Tuesday after a trade bought 750 contracts for more than $200,000 in bounty. It comes after KeyBanc Capital raised QCOM’s fiscal 2022 earnings forecast by 3.8% to $13.74 per share, citing the company’s deals to supply Apple with 5G processors and modems (AAPL) and Samsung. However, the stock is down 8.1% over the past month due to the prolonged market correction.

Here’s what could shape QCOM’s performance in the short term:

Bullish growth outlook

QCOM’s revenue and EPS are expected to increase 36.3% and 50% year-over-year to $10.89 billion and $2.88, respectively, in the third fiscal quarter (se ending in June). Analysts expect revenue to grow 28.9% year-over-year in the fourth fiscal quarter (ending September), 33.2% in fiscal 2022 and 7 .4% in fiscal year 2023.

Additionally, Street expects the company’s EPS to improve by 29.3% in the next quarter, 47.4% in the current year and 4.8% the next quarter. next year.

Updated assessment

In non-GAAP forward P/E terms, QCOM is currently trading at 9.61x, 42.8% below the industry average of 16.80x. Its forward non-GAAP PEG multiple of 0.56 is 56.7% below the industry average of 1.29.

Additionally, the stock’s forward EV/EBITDA and price/cash flow of 7.34x and 10.77x are significantly below industry averages of 11.28x and 15.61x, respectively.

Consensus Rating and Price Target Reflect Upside Potential

Of the 19 Wall Street analysts who rated QCOM, 12 rated it Buy, while seven rated it Hold. The 12-month median price target of $193.24 indicates a 59.6% upside potential from Friday’s closing price of $121.11. Price targets range from a low of $150.00 to a high of $250.00.

Favorable POWR ratings

QCOM’s overall A rating translates to a strong buy in our own POWR Rankings system. POWR ratings are calculated by considering 118 separate factors, with each factor weighted to an optimal degree.

The stock has a B rating for value and quality. Its discounted valuation compared to its peers justifies the Value rating. Additionally, the last 12 months of QCOM DEER of 107.55% is 1303.1% higher than the industry average of 7.67%, in sync with the quality score.

Of the 96 B-rated securities Semiconductor and wireless chip industry, QCOM is ranked #7.

Beyond what I said above, check out QCOM Ratings for Growth, Momentum, Sentiment and Stability here.

Conclusion

Increased demand for semiconductors globally outpacing supply has boosted QCOM’s profit margins. As this trend is expected to continue, QCOM is an ideal investment now.

How does QUALCOMM (QCOM) compare to its peers?

QCOM has an overall POWR rating of A, which equates to a strong buy rating. Check out these other semiconductor and wireless chip industry stocks with A (strong buy) ratings: Cirrus Logic, Inc. (RAW), United Microelectronics Corp. (CMU), and Xperi Corporation (XPER).


QCOM shares were trading at $120.99 per share on Monday afternoon, up $0.17 (+0.14%). Year-to-date, QCOM is down -33.21%, compared to a -22.73% rise in the benchmark S&P 500 over the same period.

About the Author: Aditi Ganguly

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the dos and don’ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing stocks. After…

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