iPhone 5 Demand Helps Drive Qualcomm To Beat Estimates And Raise Forecast

Nov. 8.12 | About: Qualcomm Inc. (QCOM)

Qualcomm (NASDAQ:QCOM) reported earnings after the bell on Wednesday. The company's report was one of the rare reports that delighted investors from the tech sector this quarter. It highlights why Qualcomm will remain one of the core positions in my portfolio even in these volatile markets.

Key earnings highlights for Qualcomm:

  • Revenue came in at $4.87B versus expectations of $4.66B. The company credited the revenue increase to the launch of the latest iPhone from Apple (NASDAQ:AAPL) at the end of the quarter and the popularity of smartphones from Samsung.
  • The company also provided next quarter guidance of between $5.6B and $6.1B, this range was above consensus calling for $5.6B in sales in the quarter.
  • Qualcomm also called for robust full-year 2013 revenue growth in a range of 20 percent to 26 percent.
  • Finally, earnings came in at 89 cents a share, a full 7 cents above estimates.

4 additional reasons QCOM is heading higher from $62 a share:

  1. The median price target held by the 41 analysts that cover the stock a $72 a share. Look for numerous upgrades and upward revisions to price targets in coming weeks based on this earnings report.
  2. The stock is still selling near the bottom of its five year valuation range based on P/S, P/E, P/CF and P/B.
  3. An investor is paying less than 14x forward earnings on a stock that has guided to at least 20% revenue growth in FY2013 after growing sales almost 30% in FY2012.
  4. The company will be a primary beneficiary of Apple straightening out its supply problems to meet the robust demand for the iPhone5 in comings. In addition, the stock sells for a five year projected PEG of under 1 (.97) and pays a decent dividend of 1.7%.

I would like to end this article by giving a big shout out to John Macris. John is a young trader that just moved down to Miami from the Midwest after college to start his career in the financial services industry and is an avid trader. We both have Qualcomm as a core holding. Yesterday, he gave me a heads up during the nadir of the market plunge that he was reading and hearing a lot of positive chatter on the stock prior to earnings and he was using the market sell-off to buy some November 60 calls. I made a move on his advice and bought some bull market call spreads (Nov 60/62.50) for 67 cents. It looks like I will almost quadruple my money on this move. Great work John, keep this up and you will be well on your way to being a successful trader and I definitely own you a beer or two.

Disclosure: I am long AAPL, QCOM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.