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QUALCOMM, Inc. (QCOM): Despite Lower Earnings Guidance, This Chipmaker Is a Buy

Also, though smartphone shipments are increasing, it’s less intense than last year. As per IDC, the global smartphone market is expected to increase 27% this year, compared to 46% last year.

Analyst rating, hedge funds, and short interest

Analysts at The Street, in a note issued on June 12, gave a ‘buy’ rating on Qualcomm. Deutsche Bank has also reiterated a “buy” rating on the semiconductor company, with a price target of $78. Zacks has reiterated a long-term “neutral” recommendation for Qualcomm.

Ninety-six of the hedge funds tracked were bullish on Qualcomm, which is a change of 1% from the earlier quarter. Some of the hedge funds that have major positions in Qualcomm stock are Fisher Asset Management, Viking Global, Lone Pine Capital, and Alkeon Capital Management.

Short interest is also a very good indicator of expectations regarding the price of these stocks. For Qualcomm, as of June 16, short interest fell 3.6% to 15.71 million shares. This indicates that traders expect the stock price to rise in the near future.

Opinion

There have been concerns that the growth of the smartphone industry is slowing, but QUALCOMM, Inc. (NASDAQ:QCOM) is showing no signs of weakness. The chip maker remains the market leader in LTE. However, in the near future, it will have to face increasing threats from other vendors in key emerging markets. Qualcomm knows this very well and is beefing up its offerings to defend its dominating position in the industry.

The long term prospects looks good, given the increasing demand for LTE-enabled mobile handsets, and management is confident about retaining the current pace of revenue and earnings growth for at least the next five years.

QUALCOMM, Inc. (NASDAQ:QCOM) looks like a good bet, however, investors must consider the global economic volatility, which may adversely affect the telecommunications industry, and in turn, Qualcomm’s performance.

The article Despite Lower Earnings Guidance, This Chipmaker Is a Buy originally appeared on Fool.com and is written by Rahul Jaiswal.

Rahul Jaiswal has no position in any stocks mentioned. The Motley Fool recommends Intel Corporation (NASDAQ:INTC). The Motley Fool owns shares of Intel and Qualcomm. Rahul is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy

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