Qualcomm (QCOM) Pre-earnings Analysis
Chart done on hourly timeframe. Qualcomm shares have rallied for the majority of the 2024 so far, but the stock will face a test this week as the company prepares to report their first quarterly earnings. The company’s revenue dropped significantly last year by 19% as macroeconomic challenges weighed down on their sales. Profitability declined along with it, with net income declining as much as 44%; however despite all that, the stock is still trading around its 52 week highs. The simple explanation is probably because of Qualcomm’s involvement in semiconductors, which is a major part of artificial intelligence. For the last 12 months, companies involved in the semiconductor space have rallied despite the underlying fundamentals. This doesn’t mean QCOM has poor fundamentals, but it explains the reason why their revenue went down and stock pushed higher in the last six months.
Coming into these earnings, what will matter most is what the company reports in guidance. The stock’s current valuation is trading at a 24x P/E, which is on the higher end of the healthy range of 15-25, but still far below its competitors. If QCOM can report strong guidance, it may bring positive attention, especially if guidance suppresses 2022 performance (their best year).
Option chain analysis:
QCOM’s option chain expiring on May 3rd, 2024 is currently reflecting an implied volatility reading of 80%, which translates to about a $12 move in the underlying stock. The direction of that move will depend on the earnings results and call.