After the January gap-down, the stock kept going down for another month, before making a rally back up to the 200-day moving average, at about 43$. Now that it has disappointed again, I'm guessing it will under-perform the market, and under-perform tech, for a longer period, at least a couple of months. I think it's a pretty safe bet, that QCOM goes below the early-March low of $35.
The Bernstein report seems to suggest that this earnings report is different than the January report and so one would think the market reaction would be different too. There is also the $3B approved buy back for this sell off to contend with.
Bernstein report:
The most important aspect that management failed to stress on the call in this – Nothing fundamentally has changed for the outlook of the licensing business after the modifications to the metrics. The sell off following last quarter’s earnings call, while extreme, was understandable, as investors were highly concerned that the fundamentals of QLT were broken. In this case, however, nothing has changed regarding the fundamental outlook for QCOMs licensing business. Regardless of adjustments to historical units and ASPs, it is important to note that the dollar market value (the product of the two) has remained unchanged. In fact, while QCOM’s new fiscal year ASP guidance is down a bit more than prior (1%), their calendar year unit forecasts are up by more (2.5%). While it is not exactly appropriate to apply fiscal year ASPs to calendar year units, this does suggest that the total device market value embedded in QCOM’s revised methodology and guidance might actually be even a bit higher than previous. |
