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On Monday, Loop Capital Markets maintained a Hold rating on Qualcomm (NASDAQ:QCOM) stock, with a price target of $155.00. The firm’s analyst Gary Mobley highlighted the potential for Qualcomm’s chipset revenue to surpass expectations in the fiscal years 2026 through 2028. Mobley’s optimism stems from the possibility that Apple (NASDAQ:AAPL)’s self-developed modem might underperform, which could result in Qualcomm retaining a larger market share in modems and RF front-end (RFFE) components than currently projected. With a market capitalization of $166.43 billion and revenue growth of 16.15% over the last twelve months, Qualcomm continues to demonstrate strong market presence. According to InvestingPro data, 16 analysts have recently revised their earnings estimates upward for the upcoming period, suggesting growing confidence in the company’s outlook.
Qualcomm’s current guidance suggests a 20% unit share for the iPhone 18’s modem and RFFE market. Loop Capital’s forecasts, which now include projections up to fiscal year 2028 for the first time, are based on Qualcomm’s market share dropping to this level for the iPhone 18 and being nonexistent for the iPhone 19. This scenario is referred to as the "As-Modeled" scenario in the detailed analysis provided by Loop Capital. The company’s strong financial position is evident in its P/E ratio of 15.41x and current annual revenue of $42.29 billion, demonstrating its significant market presence despite potential changes in the Apple relationship.
However, should Qualcomm manage to keep 2-3 of the performance SKUs for the iPhone 18, which represents approximately 70% of the overall unit share, Loop Capital sees a potential $3.75 billion revenue increase above their new FY28 total revenue estimate of $48.75 billion. This would translate to an earnings per share (EPS) increase of approximately $0.15 for every 10% market share gain.
In the report titled "QCOM’s Modem Supply to AAPL Stickier than Anticipated - Key Considerations," Loop Capital discusses the financial and technological factors that could contribute to this more favorable outcome for Qualcomm. It is crucial to note that Qualcomm’s management is planning under the assumption that their chip supply relationship with Apple will conclude with the iPhone 18, with only a 20% unit share in the device. The more positive "upside scenario" is based solely on Loop Capital’s analysis and predictions.
In other recent news, Qualcomm has reported its second-quarter fiscal 2025 earnings, surpassing analyst projections. The company achieved an earnings per share (EPS) of $2.85, exceeding the forecasted $2.80, and reported revenues of $10.84 billion, slightly above the anticipated $10.55 billion. Despite these positive results, the stock experienced a decline in after-hours trading. Qualcomm has been expanding its product offerings, including the launch of the X85 modem platform featuring AI capabilities, and has seen significant growth in the automotive and Internet of Things (IoT) sectors. Additionally, the company has outlined revenue targets for its PC and automotive sectors, aiming for substantial growth by fiscal year 2029. Analyst firm Seaport Global Securities recently initiated coverage on Qualcomm with a Neutral rating, citing challenges such as a maturing smartphone market and increasing competition from companies like Apple and Huawei. Qualcomm’s efforts to diversify its business beyond mobile phones are noted, though these are expected to take several years to fully materialize. The company remains focused on leveraging its technology leadership across various industries amidst a challenging macroeconomic environment.
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