Qualcomm tops analysts’ estimates for earnings and revenue in the second quarter

Qualcomm (NASDAQ: QCOM) released its quarterly financial results on Wednesday that pushed its stock 3% up in extended trading on top of a roughly 5% increase during the regular session.

According to Refinitiv, experts had forecast Qualcomm to print £4.02 billion in revenue in the second quarter. In terms of earnings per share, they had estimated 62.50 pence per share in the recent quarter. In its financial report on Wednesday, however, Qualcomm topped both estimates posting £4.17 billion in revenue and 70.5 pence of earnings per share.

Qualcomm’s revenue in the second quarter was up 7% and its diluted EPS was 14% higher than the year-ago figures.

Coronavirus weighed on global demand for phones in Q2

The semiconductor company also said on Wednesday that the Coronavirus pandemic weighed on demand for phones that dropped around 21% in Q2 attributed primarily to China. In the third quarter, Qualcomm added, a broader impact on phone shipments can be expected as the health crisis continues to keep the global demand for phones under pressure.

In the league of 5G chips, Qualcomm is reputed as the leading manufacturer. The company still estimates 5G phone shipments to lie in the range of 175 million and 225 million in 2020. Qualcomm is a prominent supplier of 5G chips for Apple Inc. The company expressed confidence that its customers are expected to follow their original schedule for the launch of 5G phones.

In the second quarter, Qualcomm sold 129 million modem chips and it estimates 125 million to 145 million shipments in the next quarter. According to CEO Steve Mollenkopf, Qualcomm managed to mitigate the COVID-19 impact on its supply chain and that the company expects no delays in its product commitments.

Qualcomm’s financial guidance for the third quarter

Qualcomm now estimates 48 pence to 64 pence of earnings per share in the third quarter that marks a decline of 24 pence due to the health crisis. Its Q3 revenue, the company added, is likely to print between £3.52 billion and £4.16 billion.

At £65 per share, Qualcomm is currently a little under 10% down year to date in the stock market. The stock dropped to as low as £49 per share in March. Its performance in 2019, on the contrary, was reported largely upbeat with an annual gain of around 60%.

At the time of writing, Qualcomm is valued at £72.29 billion and has a price to earnings ratio of 22.51.