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Qualcomm Gets a Jump-Start Following Consolidation

QCOM broke through resistance on high volume with a MACD buy signal


Qualcomm (QCOM) — This company develops products and services based on its advanced wireless broadband technology. Analysts anticipate solid chipset sales throughout the coming year, and its “Snapdragon” chipset is expected to provide an advantage in the wireless area over competitors. It also has a strong royalty base in markets like China, which are converting from 2G to 3G.

I have been recommending the stock since October 2013. Since my latest recommendation on April 16, near $80, the consensus earnings estimate for fiscal 2014 (ended in September) has increased $0.03 to $5.17 per share. And the estimate for fiscal 2015 is up $0.02 to $5.73. Analysts’ median target is $88.

The company recently raised its quarterly cash dividend by 20% to $0.42 per share for a current 2.1% yield, and increased its share repurchase agreement by $5 billion to $7.8 billion.

Following my report in April, QCOM consolidated its gains by trading in a narrow band with support at $78 and resistance at $80.30. On Tuesday, the stock broke through the upper resistance barrier on high volume and a MACD buy signal. Buy QCOM at $81 or lower with a trading target of $88. The company is scheduled to announce earnings today after the close.

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