Is QUALCOMM, Inc. (QCOM) Stock A Good Buy Following Its Latest Earnings?

Page 2 of 2

Some Welcome News On NXP Semiconductors NV (NASDAQ:NXPI) Front

NXP Semiconductors NV (NASDAQ:NXPI) shareholders have approved all terms proposed by Qualcomm in their latest general meeting on Jan 27th. This news reaffirms that the NXP semiconductors acquisition is on track to close by the end of CY17 despite QCOM’s legal disputes. This is very vital for Qualcomm’s diversification plans given the forecast of sluggish smartphone sales. According to Qualcomm CEO Steve Mollenkopf, this acquisition “will provide the next significant growth period for QUALCOMM with an estimated $138 billion serviceable addressable market in 2020.”

Qualcomm’s joint venture with TDK Corp. to develop radio frequency (RF) front-end modules and filters is really welcome news for QCOM stock investors. According to Steve Mollenkopf on the earnings call, they “expect to close the JV this quarter”. This JV would be a great value addition for Qualcomm as it moves more into the IoT space with the NXP Semiconductors NV (NASDAQ:NXPI) acquisition. As Qualcomm expects RF front-end market alone to be a $18B opportunity by 2020 (2).

Follow Nxp Semiconductors N.v. (NASDAQ:NXPI)

Summing It Up

QUALCOMM, Inc. (NASDAQ:QCOM) investors need to be aware that the company’s core business, which generated $6.9 billion of free cash flow in fiscal 2016, is still strong. The risks surrounding the legal disputes seem to be priced into QCOM stock, though one cannot rule out that it may go down further. A Seeking Alpha post (3) suggests “in the worst case, the stock could slump to $48-$50.” QCOM stock is at very cheap levels, trading at a PE of 14.24, compared to the industry average of 22. Also, Qualcomm’s dividend yield of 3.74% is still great and its dividends are safe even after the NXP acquisition. Given all these details QCOM stock could be a value play, albeit a risky one. The stock may not be this cheap for long, it would be prudent for risk-averse investors to stay away from QCOM stock until we get a more clear view of the verdicts of the lawsuit.

Looking for great tech stocks? Check out Amigobulls’ top stock picks, which have beaten the NASDAQ by over 122%.

The article Is QUALCOMM, Inc. (QCOM) Stock A Good Buy Following Its Latest Earnings? originally appeared on amigobulls.com. Watch our analysis video on QCOM.

Amigobulls.com – Watch, Analyze, Invest. Why spend hours putting together numbers you can get in minutes, in one simple video? Our ‘Robo Advisor’ videos give you every number that matters, in 1 minute. Find insightful articles with ideas on investing, top stock picks that outperform the markets, personalized portfolio analysis videos and a whole lot more. Amigobulls.com – Your Friend On Wall Street.

Additional Links:

(1) http://blogs.barrons.com/techtraderdaily/2017/01/26/qualcomm-drops-6-will-apple-suit-leave-them-with-a-lower-royalty-rate/

(2) http://www.fool.com/investing/general/2016/01/25/what-qualcomm-incs-joint-venture-with-tdk-corp-mea.aspx

(3) http://seekingalpha.com/article/4040367-qualcomm-fearful-greedy

Page 2 of 2