Fifth-generation telecommunications-network technology (5G) is quickly becoming a reality. There are a number of companies involved in 5G now, and top among them is Qualcomm (NASDAQ:QCOM). But the price of Qualcomm stock has taken a hit recently amid fears surrounding the coronavirus from China. Other macroeconomic concerns plaguing Wall Street right now have also taken a toll on the stock.
But these factors aren’t necessarily specific to the company. And nothing is likely to stop the 5G-technology revolution that’s in progress.
If you’d like to take a bullish position on 5G in 2020, Qualcomm stock could provide you with direct exposure to this technology. Even with coronavirus fears swirling, you can still confidently buy this stock and hold it for the long term.
A Quarter Boosted by 5G
Qualcomm got into 5G early and it has consistently stayed on the cutting edge. This type of investment doesn’t always pay off immediately. However, it does help to build an economic moat.
It appears that Qualcomm’s 5G rollout may have contributed to the company’s impressive adjusted fiscal first-quarter earnings and revenues. The company reported its Q1 results in early February, and it easily beat analysts’ expectations.
During the company’s fiscal first quarter, Qualcomm generated adjusted earnings per share of 99 cents, beating the Wall Street consensus estimate of 85 cents. As for the quarterly revenues, the actual figure turned out to be $5.06 billion, beating the analysts’ consensus estimate of $4.84 billion.
CEO Steve Mollenkopf seized the opportunity to cite the company’s 5G rollout as a contributing factor to the quarterly earnings results. He said, “Our strong fiscal first quarter financial performance reflects a significant inflection point for Qualcomm as we begin to realize the benefits from the ramp of 5G.”
Moreover, analysts seem to be leaning bullish on Qualcomm stock. FactSet reports that 57% of analysts maintain a rating of buy or overweight rating on Qualcomm. Plus another 43% of the analysts gave Qualcomm a hold rating. That leaves no analysts assigning the company a sell or underweight rating, at least according to FactSet.
5G Will Provide a Tailwind for Qualcomm
Concerns about the spread of the coronavirus are perfectly understandable. However, there are companies with a strong 5G component that could still remain profitable. Qualcomm is one of those companies.
Analysts have pointed out Qualcomm’s 5G strength numerous times. For example, Raymond James analyst Chris Caso assigned a strong buy rating to Qualcomm stock, citing a “significant 36% rise in content, driven from both 5G modems and new RF content.” In another example, Citi analyst Christopher Danely assigned the chipmaker a buy rating, noting that Qualcomm is “one of the largest beneficiaries” of the 5G rollout.
Not every analyst is entirely bullish, however. As InvestorPlace contributor Ian Cooper pointed out, Piper Jaffray analyst Harsh Kumar expressed concern. “We are wary of current valuation given the potential near-term coronavirus risk to 5G handsets,” Kumar said.
However, that’s just one analyst’s evaluation and doesn’t represent the overall sentiment on Qualcomm. As I’ve recently explained, the demand for 5G upgrades is rising on a global scale. Best of all, Qualcomm’s 5G products are system-agnostic. This means that by and large, they can work with all of the most commonly used 5G-network infrastructures.
The Final Word on Qualcomm Stock
The coronavirus has infused the market with fear, but given the potential for Qualcomm in the 5G space and the company’s strong fundamentals, it’s no surprise the stock earns a “B” rating here.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
