Why Qualcomm Stock Was Crushing it This Week
Key Points
Despite top and bottom-line declines, market players were impressed with the company's recent news.
Its CEO announced it had secured a notable data center client.
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Qualcomm (NASDAQ: QCOM) stock has indisputably been an investor darling over the past few days. Largely on the strength of an encouraging second quarter, the results of which were published on Wednesday, market players were eager to get their hands on the company's equity.
By the time early Friday afternoon rolled around, Qualcomm had risen almost 18% week to date, according to data compiled by S&P Global Market Intelligence.
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Fundamental beats and price target raises
Qualcomm's headline figures for the quarter actually slumped year over year. Revenue fell by 2% to $10.6 billion, while net income not under generally accepted accounting principles (GAAP) declined by 10% to $2.84 billion ($2.65 per share).
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Both results compare favorably with the average analyst estimates, which were $10.56 billion in revenue and $2.55 per share for adjusted net income.
The telecom equipment specialist particularly impressed a clutch of those researchers, who wasted little time raising their price targets on the stock. Among these were some top names in the financial sector, such as Wells Fargo, JPMorgan Chase unit J.P. Morgan, and Morgan Stanley.
This, however, didn't necessarily mean those analysts were bullish on Qualcomm's future.
J.P. Morgan's Samik Chatterjee added $20 per share to his price target for a new level of $160, but maintained his neutral recommendation. The dynamic was similar to Wells Fargo's Aaron Rakers, who hiked his price target from $150 to $160 but kept his equal weight (i.e., neutral) tag intact.
Finally, Morgan Stanley's Joseph Moore didn't budge from his underweight (sell) opinion, but raised his price target to $146 per share from $132.
A hot business niche
Investors basically ignored these to concentrate on management's pronouncements about Qualcomm's data center chip business. CEO Chrisiano Amon revealed that the company had secured an unnamed "leading hyperscaler" as a customer for such work, with shipments to begin in December.
To me, that isn't enough to juice enthusiasm for the company. However, if that business takes off -- and we finally learn who this important client is -- the prospects for its future could burn brighter.
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Wells Fargo is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase and Qualcomm. The Motley Fool has a disclosure policy.
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