Deutsche Bank Downgrades Qualcomm (QCOM) to Hold, 'we see the shares as fairly valued'

(Updated - August 3, 2023 4:39 AM EDT)

Deutsche Bank analyst Ross Seymore downgraded Qualcomm (NASDAQ: QCOM) from Buy to Hold with a price target of $120.00 (from $130.00).

The analyst comments "QCOM delivered and in-line qtr and guide vs. our estimates, but management’s soft commentary around its Dec qtr and incremental headwinds in 2024 lead us to reduce our CY24 EPS ests by -8% and downgrade the stock to a Hold rating. While we continue to believe the cyclical snapback is a matter of when not if (and build in such a rebound in IoT, Auto and QTL), the duration of the headwinds QCOM continues to face in its Handset segment is leading to rising structural rather than just cyclical questions (i.e. mix, pricing, post-5G lull, etc.). When combined with uncertainty around significant customers such as AAPL (Will QCOM be displaced in 2H24 or not? DBe assume partial exit) and now Huawei (potentially a 3% revenue headwind as trying to build its own 5G modem), we believe confidence in the co’s growth potential will remain challenged. Consequently, with QCOM shares trading at its 5yr avg multiple (14x) on our reduced ests that already assume some cyclical rebound and better than the worst case customer scenarios, we see the shares as fairly valued and likely to remain in a $120 +/- trading range until these cyclical and structural uncertainties are resolved."

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 $129.27 yesterday.

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