Buy Qualcomm (QCOM) Pullback, Says Goldman Sachs

November 7, 2013 8:52 AM EST Send to a Friend
Get Alerts QCOM Hot Sheet
Price: $72.26 --0%

Rating Summary:
    22 Buy, 17 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 0
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Goldman Sachs maintained a Buy rating on Qualcomm (NASDAQ: QCOM) with a price target of $80.00. Shares traded lower following Q4 results. In the view of analyst Simona Jankowski, investors should buy the pullback.

"Qualcomm shares were down slightly after hours, in our view on concerns over the company’s weaker chipset margins, which came in at 16% vs. GS/Cons. estimates at 17%, and were also guided below consensus for F1Q. We would use the pullback to buy the stock as the more important driver of Qualcomm's earnings power – the royalty segment – had several important positives, including (1) stronger ASPs, with Qualcomm guiding for just a 1% ASP decline in FY14 at the midpoint, much better than feared, (2) stronger 3G/4G volumes, with CY13 guidance raised by 5% and CY14 guidance for 15% growth at the midpoint, and (3) increased optimism on monetizing TD-LTE in China," said Jankowski.

"Importantly, Qualcomm guided for doubledigit top- and bottom-line growth over the next five years, which in our view is impressive given the company just posted 30% revenue growth in FY13 and had a 3-year revenue/EPS CAGR of 31%/22%. As for chipset margins, Qualcomm is taking cost reduction measures for the first time in years, planning to exit FY14 at a lower opex runrate than exiting FY13," he added.

For an analyst ratings summary and ratings history on Qualcomm click here. For more ratings news on Qualcomm click here.

Shares of Qualcomm closed at $69.74 yesterday.


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