Qualcomm stock rallies after earnings beat

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A Qualcomm sign is seen at the second China International Import Expo (CIIE) in Shanghai, China November 6, 2019. REUTERS/Aly Song
Aly Song | Reuters

Shares of Qualcomm extended their double-digit gain into Thursday morning after the company posted strong fourth quarter finances that exceeded Wall Street’s expectations.

The company’s stock was up nearly 14% in the premarket.

“We believe the stars are aligning for Qualcomm, with a multi-year global 5G cycle starting to ramp, the full benefit of royalties from all major OEMs increases in semiconductor content and pricing, and technology leadership,” Bank of America analysts wrote in a note Thursday. OEMs are original equipment manufacturers. The analysts raised their price target to $180 from $165.

Qualcomm said it will benefit from the rise of 5G networks and handsets. One of its 5G modem chips is included in Apple‘s iPhone 12, the first iPhone to include 5G capabilities. Qualcomm added Wednesday that it expects about 200 million smartphones with 5G to be shipped in 2020, and about 500 million 5G smartphones to be shipped in 2021. 

The company also provided guidance for its fiscal first-quarter ending in December. It said it expects revenue between $7.8 billion and $8.6 billion, and adjusted EPS between $1.95 and $2.15.

“With global smartphone volumes steadily recovering, Qualcomm is well-positioned to benefit from the long-term 5G investment cycle and we anticipate strong earnings through F2022 and beyond,” Canaccord Genuity analysts wrote in a note Wednesday. The firm raised its price target to $175 from $150.

Qualcomm reported $1.45 adjusted earnings per share on adjusted revenue of $6.5 billion, compared to Wall Street’s estimated $1.17 earnings per share on revenue of $5.93 billion.

— CNBC’s Michael Bloom contributed to this report.

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