On Thursday, BofA Securities updated its outlook on Qualcomm (NASDAQ:QCOM) shares, raising the stock price target to $180 from the previous $173. The firm maintained its Buy rating on the stock, following a report that the company's second-quarter revenues showed a 1.3% year-over-year increase, surpassing the expected 0.5%.
The growth was attributed to a 1.1% rise in QCT (semiconductors) revenues, which also exceeded the forecasted 0.8%, and a 2.2% increase in QTL (licensing) revenues, ahead of the anticipated 1.6%.
The financial performance of Qualcomm was further highlighted by gross and operating margins that outperformed expectations by 40 and 90 basis points, respectively. This led to an earnings per share (EPS) of $2.44, which beat the Street's estimates by $0.12. The positive results have prompted management to project a 9% year-over-year revenue growth for the third quarter, above the 7.6% estimated by analysts.
BofA Securities has adjusted its estimates in response to Qualcomm's outlook and the recent quarter's performance. The new stock price objective of $180 is now based on roughly 16.5 times the projected 2025 earnings per share, an increase from the previous 16 times multiple. The firm's analyst cited the favorable risk/reward balance for Qualcomm's stock as a reason for reiterating the Buy rating and adjusting the price target upward.
InvestingPro Insights
Qualcomm has demonstrated remarkable resilience and growth, which is reflected in the recent upbeat analysis by BofA Securities. To provide further context, InvestingPro data reveals a strong financial standing with a market capitalization of $183.29 billion and a robust Price/Earnings (P/E) ratio of 19.87 when adjusted for the last twelve months as of Q2 2024.
This is complemented by a notable dividend yield of 2.07%, showcasing the company's commitment to returning value to shareholders, as evidenced by its 21-year streak of dividend increases—an InvestingPro Tip that aligns with the stock's low price volatility.
Another InvestingPro Tip highlights Qualcomm as a prominent player in the Semiconductors & Semiconductor Equipment industry, which is supported by a Price/Book ratio of 7.49, indicating investor confidence in the company's assets and future growth potential.
The firm's revenue growth of 1.23% in Q2 2024, along with a strong return on assets at 16.52%, further cements Qualcomm's position in the market. The company's stock has also experienced a significant price uptick over the last six months, with a 41.44% return, underscoring the bullish sentiment echoed by BofA Securities.
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