Friday, November 9, 2018

Qualcomm: Don't Overreact

Qualcomm is down over 8% on disappointing FQ1 guidance.
Apple remains the main thorn in their financials impacting the comparisons until the license dispute is resolved.
Business remains solid, with EPS targets rising even without ~$1.7 billion in high-margin license revenue.
The net payout yield is set to reach 35% make a very bullish buy signal.
The perplexing story of Qualcomm (QCOM) was further evident by the reaction to a large FQ4 earnings beat. After massive stock buybacks and with 5G on the horizon, now isn't the time to abandon ship just because Apple(AAPL) continues playing hardball. My long-term investment thesis remains solid.
Read the full article on Seeking Alpha. 

Update 11/15
Interesting upgrade from a Sell by Morgan Stanley. Don't agree that Apple won't be resolved in 2019, but the stock is clearly a buy at $55.

"We see a balanced risk/reward as the market now has more realistic assumptions around Apple, chip margin improvements and handset demand," says analyst James Faucette and team, which boosted its rating to Equal Weight from Underweight. But a possible resolution of the Apple dispute seems unlikely in 2019, and 5G networks won't be widely available until 2020. (h/t Bloomberg)

Disclosure: Long QCOM, AAPL. Please review the disclaimer pages for more details. 

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