Recently, Qualcomm (NASDAQ:QCOM) picked up on a call from investors wanting desperately to buy in on the company's growth and earnings. So much so, in fact, that a chart that was otherwise flat for the last five days has one almost-vertical upward ascent toward the end of it, demonstrating that Qualcomm recently ran into a whole lot of success that got investors very interested.
An Earnings Beat to Start Things Off
When an earnings beat is just the beginning of good news for a company, you know you're in for one impressive report ahead. Qualcomm's fiscal fourth quarter was impressive by any standard, both objective—the company brought in gross revenue of $8.3 billion for the quarter—and subjective, as that $8.3 billion in revenue was up 73% over the same time last year.
Better yet, Qualcomm's quarter shattered expectations as well; the consensus suggested the company would bring in $5.9 billion this quarter, and that was quite clearly destroyed. Profit per share came in at $1.45, which was also well ahead of estimates looking for $1.19 per share to come in.
Better News to Follow
The earnings numbers were impressive, and Qualcomm quickly followed up on those numbers with insight into how this particular sausage was made. Qualcomm has been frantically working to diversify its operations beyond what can be yielded from the phone market, and the value of such moves showed clearly.
For instance, the QTL licensing arm of Qualcomm, brought in $1.5 billion in sales for the company by itself, which represents a 30% gain from this time last year. Its chip revenue saw a similar jump, climbing 38% over this time last year by bringing in a full $5 billion. Qualcomm noted that, for the 2020 fiscal year, the company brought in $3.67 billion just in deals between itself and carmakers, along with other internet-connected tools.
Just to top the magnificent sundae set before investors, Qualcomm brought out a nice little cherry with news that it won't have to revisit a case brought by the Federal Trade Commission (FTC) in the US. That ends a string of legal battles that faced the company previously, and now it can carry on full steam ahead.
But Wait! There's More!
It's already been a cavalcade of good news coming out for Qualcomm so far, and our latest research suggests that there's more waiting. The analyst consensus around Qualcomm remains a buy, and just a little stronger buy than it was even a month ago. Back then, the company had one “sell” rating, seven “hold” ratings, 19 “buy” ratings, and one “strong buy.” Now, the company has that same “sell” and “strong buy,” but added one more “hold” and one more “buy” to the mix.
The company's price target has also been trending steadily upward for the last six months, starting out at $88.72 and heading up to $137.84. Given that Qualcomm is currently trading at $146.72 as of this writing, it's clear that some price targets are likely to get revised upward in the not too distant future. In fact, 11 separate analysts did so today alone. Canaccord Genuity, for example, upped targets from $150 to $175, noting the company was in a good position to gain ground with the rise of 5G.
Qualcomm A Major Part of a Major Business
The biggest point in favor of Qualcomm, essentially, is the fact that it has a big stake in the growth of 5G connectivity. The return of the global smartphone market—which was hampered substantially by the fact that a lot of smartphone stores were closed for a while back around March—is giving Qualcomm extra spring in its collective step. With the 5G investment cycle really only just beginning in a lot of places—rollouts are still spotty at best—that's giving Qualcomm even more to work with.
Some have described the current set of circumstances at Qualcomm being a lot like stars aligning. That's not too far off; take one part pent-up demand for new devices, one part new connectivity tool that's only going to branch out from where it is now, and one part increasing demand for internet-connected devices and Internet of Things (IoT) operations, and the end result is the same: Qualcomm wins big. The massive gains seen recently, backed up by the numbers it's produced so far, make Qualcomm a winner throughout the spectrum.
