Apparently, not every big-bank analyst group is bullish on Qualcomm (NASDAQ:QCOM) now. Indeed, analysts with Wells Fargo expressed concerns over Qualcomm’s exposure to the mobile-handset market. Consequently, they issued a less-than-optimistic rating and price target on QCOM stock. This may have caused shares to lose value this morning.
Based in San Diego, Qualcomm is a manufacturer of microchips and other components used in wireless communications technology. Throughout 2022, Qualcomm’s investors have suffered collateral damage from the broader Big Tech wreck.
Is this a prime buy-the-dip opportunity? Wells Fargo analysts don’t seem to believe so, as they downgraded Qualcomm from “equal weight” to “underweight.” Furthermore, the analysts reiterated their $105 price target on shares.
Sometimes, maintaining a price target is an expression of optimism. This doesn’t appear to be the case, however, with the Wells Fargo analysts and Qualcomm.
What’s Happening With QCOM Stock?
The downgrade may have contributed to a slight decline in QCOM stock this morning. In early trading, shares declined to $118 and change and were down roughly 1%.
Thus, the Wells Fargo analysts’ $105 price target is certainly bearish. What’s prompting this pessimism? Wells Fargo analyst Gary Mobley predicts that shares of businesses with “high smartphone exposure should underperform the broader chip sector” even after that sector bottoms out and/or turns upward.
Presumably, Qualcomm is among those chipmakers with “high smartphone exposure.” Mobley is decidedly not super bullish on the smartphone industry, as he referred to it as the “no-growth mobile handset market.”
Hence, Mobley might advise prospective investors to be hands-off when it comes to the handset market. He would also probably suggest that there’s more pain ahead for loyal QCOM stock investors, even though shares have already lost significant value in 2022.
Some folks might disagree, however, as Qualcomm continues to pay a decent dividend and has an attractive trailing 12-month price-to-earnings (P/E) ratio of 10.31x. So, the debate over Qualcomm’s value proposition isn’t settled yet, even if the company’s exposure to the “no-growth mobile handset market” is a concern.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
