Qualcomm Jumps after Sales Surge 52%

QUALCOMM Incorporated (QCOM) shares surged 5.21% in extended-hours trade Wednesday after the company delivered a quarterly earnings report that blew past Wall Street’s expectations.

The San Diego-based chipmaker disclosed a fiscal second quarter (Q2) adjusted profit of $1.90 per share, with the figure coming in ahead of the $1.67 consensus mark and growing 116% from a year earlier. Meanwhile, revenues of $7.94 billion topped the Street forecast and surged 52% from the March 2020 quarter. Management credited higher phone demand and robust handset shipments to China for the better-than-expected results.

Moving forward, the company sees fiscal Q3 adjusted earnings of $1.55 to $1.75 per share on revenues of $7.1 billion to $7.9 billion. Analysts forecast adjusted EPS of $1.52 and $7.11 billion in sales. “Looking ahead, Qualcomm is well-positioned for continued growth, and we remain confident in our ability to execute on the many opportunities in front of us,” said CEO Steve Mollenkopf in a statement accompanying the results, per MarketWatch.

Through Wednesday’s close, Qualcomm stock has a market capitalization of $156.78 billion, offers a 1.99% dividend yield, and trades 10.35% lower since the start of the year. However, the shares have gained over 80% over the past 12 months, outpacing the sector average by 6%. Valuation-wise, the stock trades 18.5% above its five-year average forward earnings multiple of 16.

Wall Street View

Earlier this month, Susquehanna analyst Christopher Rolland downgraded the stock to ‘Neutral’ from ‘Positive’ and trimmed his price target from $175 to $155. Rolland cited valuation concerns for the downgrade. “Industry lead-times and valuation multiples have expanded to levels well beyond their historical averages, adding potential risk to this already volatile sector,” he said.

Elsewhere, the stock receives 16 ‘Buy’ ratings, 2 “Overweight’ ratings, 9 ‘Hold’ ratings, and 1 ‘Sell’ rating. Brokerage twelve-month price targets range from $122 to $200, with the median sitting at $170.

Technical Outlook and Trading Tactics

Qualcomm shares have spent the past six weeks tracking along an uptrend line extending back to the March 2020 pandemic low. Furthermore, the price also finds support from the rising 200-day simple moving average (SMA).

Thursday’s expected rally from this level may act as a catalyst for the next significant move higher, possibly up to the all-time high (ATH) at $167.94. Those who take a trade here should minimize the downside with a stop-loss order placed beneath last week’s low at $132.47.

For a look at today’s earnings schedule, check out our earnings calendar.

Chipmaker Qualcomm’s Shares Slump as Supply Constraint Hurts Sales Growth

The world’s biggest mobile phone chipmaker Qualcomm’s shares slumped as much as 8.4% in extended trading on Wednesday after the company warned that the global semiconductor industry is struggling hard to keep up with demand due to supply chain constraints.

“The shortage in the semiconductor industry is across the board,” said incoming Chief Executive Officer Cristiano Amon, Bloomberg reported.

“Based on Qualcomm’s management, its performance was curbed by supply constraints. Its foundry partners are currently struggling to keep up with demand in some areas of the industry. The management did not specify which products are in shortage but according to our recent checks with Chinese smartphone assemblers, Qualcomm’s PMIC is in severe shortage and therefore volume growth was capped, “according to Fubon Research.

Following this, Qualcomm shares slumped as much as 8.4% to $148.7 in extended trading on Wednesday. However, the stock rose over 70% in 2020.

Qualcomm reported sales of $8.24 billion, missing the Wall Street consensus estimate of $8.27 billion. However, the adjusted profit came in at $2.17 per share, beating the market expectations of $2.10 per share.

Qualcomm reported fiscal first-quarter results consistent with management’s guidance, with the firm benefiting from the ongoing ramp of 5G smartphones. Chipset, or QCT, sales were boosted by Apple’s 5G iPhone 12 that features the Qualcomm modem and other content such as a transceiver and subsystem for the sub-6 GHz portion of the overall 5Gmodule,” said Abhinav Davuluri, sector strategist at Morningstar.

“For calendar 2021, management expects high-single-digit unit growth for smartphones, with a range of 450 million to 550 million 5G handset shipments. Shares of narrow-moat Qualcomm were down 6% after hours, which we attribute to the market having lofty expectations after Skyworks, a major RF supplier, recently beat its quarterly guidance by more than 40%. That said, the firm’s results and forecast were ahead of our prior expectations, and thus we are raising our fair value estimate to $136 per share from $124.  Nevertheless, shares look overvalued at current levels.”

Qualcomm Stock Price Forecast

Twenty-four analysts who offered stock ratings for Qualcomm in the last three months forecast the average price in 12 months at $171.61 with a high forecast of $200.00 and a low forecast of $125.00.

The average price target represents a 5.74% increase from the last price of $162.30. From those 24 analysts, 17 rated “Buy”, seven rated “Hold”, and none rate “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $171 with a high of $194 under a bull scenario and $113 under the worst-case scenario. The firm currently has an “Overweight” rating on the semiconductor company’s stock.

Several other analysts have also recently commented on the stock. Rosenblatt Securities raised the price target to $175 from $155. UBS upped the price objective to $155 from $125. Bernstein increased the target price to $185 from $175. Qualcomm had its price target hoisted by Raymond James to $190 from $150. The brokerage currently has a strong-buy rating on the wireless technology company’s stock.

In addition, Cowen upped their price objective to $180 from $170 and gave the stock an outperform rating. Piper Sandler upped their price objective to $150 from $140 and gave the stock a neutral rating.

Analyst Comments

“We see an improvement in smartphone demand in 2021 after declining 5% in 2020 due to COVID-19. We also see 5G adding greater dollar content and supporting industry-wide handset volume growth. Qualcomm’s (QCOM) leadership in cellular technologies (3G/4G/5G) puts the company in a favourable position to maintain leading market share,” said Joseph Moore, equity analyst at Morgan Stanley.

“The potential elimination of a major competitor in the Chinese market, HiSilicon, should benefit QCOM as Huawei currently does not pay royalties. To the extent competitors that do pay royalties are able to pick up market share, that would be beneficial for QCOM.”

Check out FX Empire’s earnings calendar

Top 3 Best 5G Stocks to Buy

The best 5G stocks to buy

Widepoint (WYY) analysis

Widepoint is an IT company with products, services, and solutions for commercial companies, federal and state governments. WYY has long-term government contracts. What can be better? The market cap is only $ 73 million. However, the company has the potential to add $500 million in revenue. Another good thing for investors Widepoint is debt-free. But, there are some minuses also. The main risk for investors is significant insider selling over the last 3 months. PEG ratio is 1.3.

widepoint debt

Franklin Wireless (FKWL) analysis

The company provides intelligent wireless solutions. Its products include mobile hotspots, routers, trackers, and other devices. It integrates hardware and software enabling machine-to-machine (M2M) applications and the Internet of Things (IoT). In other words, a company is a player in a wide range of markets, not only 5G. Recently FKWL announced Pintrac Drive, an aftermarket On-Board Diagnostic (OBDII) device that enables non-connected cars to connect to global 4G LTE networks for enhanced services and broadband wireless connectivity. It allows smart tracking of vehicles on the road.

The market cap of this company is only $250 million. By the way, Franklin Wireless announced recently the collaboration with Qualcomm. Also, the company partners with Patron for the 5G business and technology solutions to the world-wide market. FKWL reports a 160% increase in revenue to $75 million. At the same time operating expenses declined over 5% to $7.4 million. The company increased its research and development expenses by 27% vs last year. It is a very good sign for long-term investors. The company is trying to take leading positions in innovations. As you see Franklin Wireless is very strong and has big potential growth. PEG ratio is 0.7.

However, there is significant insider selling over the past 3 months. It is the main risk for this stock.

franklin revenue

Qualcomm (QCOM) analysis

Qualcomm is the major 5G player. It is a semiconductor supplier that also collects royalties on its wireless technology patents. Apple recently announced all of its 5G iPhone 12 models will support millimeter-wave capabilities. Qualcomm is the only RF vendor that has millimeter-wave solutions shipping at large volumes. Most developed global economies are expected to deploy millimeter wave spectrum by the end of 2021. The company pays dividends at 1.66%. There are also few risks when it comes to investing in QCOM. The PEG ratio is very high – 3.4. Besides, the company has a high level of debt.

qcom 5g stocks

In conclusion

5G industry has a big potential in the long-term perspective. However, there are a number of risks in this sector.

Earnings to Watch Next Week: Pfizer, Alibaba, Amazon, Alphabet and Qualcomm in Focus

Earnings Calendar For The Week Of February 1

Monday (February 1)

IN THE SPOTLIGHT: VERTEX PHARMACEUTICALS, NXP SEMICONDUCTORS, ON SEMICONDUCTOR

VERTEX PHARMACEUTICALS: The biopharmaceutical company is expected to report a profit of $2.55 in the fourth quarter, which represents year-over-year growth of 50% from the same quarter a year ago when the company reported $1.70 cents per share.

However, Wall Street forecasts the company’s revenue to grow about 12% to $1.58 billion.

“Q4 estimates for Vertex‘s CF franchise appear achievable based on recent trends. With industry-leading growth and its fundamentals largely intact despite COVID-19, we expect the current dislocation between Vertex Pharmaceuticals’ (VRTX) trading price and the value of its CF franchise to be only temporary. We would use the recent stock weakness to build a position,” said equity analysts at Cowen and Company, who also gave a price target of $300.

NXP SEMICONDUCTORS: Eindhoven, Netherlands-based semiconductor manufacturer will post earnings of $2.11 per share in the December quarter on revenue of $2.46 billion, up from $1.98 per share on revenue of $2.30 billion same quarter last year. For the December quarter, the forecasts revenue in the range of $2.375-$2.525 billion which, at the midpoint, represents growth of 8% sequentially and 6% year-over-year.

“Management remains upbeat about near-term demand, including 2021, especially regarding its mobile chip business as the firm’s ultra-wideband connectivity solutions are rapidly gaining adoption within newer smartphones. We raise our fair value estimate to $150 from $130, and with shares trading around $134, we view shares as slightly undervalued,” said equity analysts at Cowen and Company.

ON SEMICONDUCTOR: Phoenix, Arizona-based semiconductors supplier company will post earnings of $0.28 per share for last quarter of 2020. The revenue is expected to slump 3.0% on a year-over-year basis.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 1

Ticker Company EPS Forecast
TMO Thermo Fisher Scientific $6.52
OTIS Otis Worldwide Corp $0.59
RYAAY Ryanair -$1.11
ON ON Semiconductor $0.28
AEIS Advanced Energy Industries $1.34
ITUB Itau Unibanco $0.10
CACC Credit Acceptance $7.22
WWD Woodward $0.68
NXPI NXP Semiconductors $2.11
RMBS Rambus $0.25
ARE Alexandria Real Estate Equities $0.48
KRC Kilroy Realty $0.36
CRUS Cirrus Logic $1.86
OMCL Omnicell $0.80
KMPR Kemper $1.55
PCH Potlatch $1.37
KMT Kennametal $0.09
FN Fabrinet $1.04
IBTX Independent Bank $1.33
CBT Cabot $0.87
VRTX Vertex Pharmaceuticals $2.55
BKRKY Bank Rakyat $0.17
BECN Beacon Roofing Supply $0.63
LBRDK Liberty Broadband Lbrdk $1.06
IX Orix $1.95
RBC Regal Beloit Corporation $1.57
MFG Mizuho Financial $0.08

 

Tuesday (February 2)

IN THE SPOTLIGHT: PFIZER, ALIBABA, AMAZON, ALPHABET

PFIZER: The world’s largest pharmaceutical giant is expected to report a profit of $0.52 in the fourth quarter, which represents a year-over-year decline of about 5.4% from the same quarter last year when the company reported $0.55 per share.

The pharmaceutical company, which ranked 64th on the 2020 Fortune 500 list of the largest U.S. corporations by total revenue, will report revenue of $12.85 billion, up 1.3% from the year-ago quarter. According to chief executive officer Albert Bourla, Pfizer is likely to post this year’s earnings in the range of $3 to $3.10 per share.

“We lowered our 4Qe revenue by 5% from $11.6B to $11.0B and EPS by 6% from $0.40 to $0.38 to reflect lower doses delivered in 4Q. We lowered our 4Q COVID vaccine revenues from $683M to $150M (assuming $19.50/dose). Our prior model assumed 35M doses, which we lowered to 7.7M doses based upon CDC distribution allocations,” said David Risinger, equity analyst at Morgan Stanley.

“Our 4Q projections are well below consensus, but we do not see 4Q results as a stock driver given all of the confounding factors. We are instead focused on management’s 2021 targets.”

ALIBABA: The largest online and mobile e-commerce company in the world is expected to earn $2.65 per share for the third quarter, according to equities analysts at Oppenheimer. Oppenheimer also set EPS estimates for FY2021 at $7.48 and FY2022 at $9.33.

The Chinese multinational technology company has surpassed consensus estimates with an average of about 25% in all four previous quarters.

“We expect healthy GMV growth of 16% to drive core of core revenue growth of 18% on better monetization, but slower adjusted EBITA growth of 11% due to continued investment in new initiatives. Stay Overweight on F2022e non-GAAP P/E of 19x; lower price target to $320,” said Gary Yu, equity analyst at Morgan Stanley.

“We forecast total revenue of Rmb216bn (+33.8% YoY, +39.3% QoQ), non-GAAP EBITA of Rmb61.5bn (+21.4% YoY, +49.2% QoQ) with margin at 28.5% and non-GAAP net profit of Rmb57.2bn (+17.7% YoY, +16.1% QoQ) with margin at 26.5%.”

AMAZON: The eCommerce leader for physical and digital merchandise is expected to report a profit of $7.16 in the fourth quarter, which represents a year-over-year decline of over 10% from the same quarter last year when the company reported $6.47 per share.

The Seattle, Washington-based multinational technology giant will report revenue of $120.4 billion, up over 37% from the year-ago quarter. The company expects net sales between $112- $121 billion during the quarter.

Amazon‘s high-margin businesses continue to allow Amazon to drive greater profitability while still continuing to invest (last-mile delivery, fulfilment, Prime Now, Fresh, Prime digital content, Alexa/Echo, India, AWS, etc),” noted Brian Nowak, equity analyst at Morgan Stanley.

Amazon Prime membership growth drives recurring revenue and a positive mix shift. Cloud adoption hitting an inflection point. Advertising serves as a key area for both further growth potential and profitability flow-through.”

ALPHABET: The parent of Google and the world’s largest search engine, which dominates Internet search activity globally will post earnings of $15.68 per share for last quarter of 2020. The consensus mark for revenues is pegged at $44.09 billion, implying growth of 17.3% from the year-ago reported figure, according to ZACKS Research.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 2

Ticker Company EPS Forecast
HOG Harley Davidson $0.21
WAT Waters $2.87
ST Sensata Technologies $0.78
HUBB Hubbell $1.76
LITE Lumentum Holdings Inc $1.89
AMG Affiliated Managers $3.68
HAE Haemonetics $0.65
MAN ManpowerGroup $1.14
GPK Graphic Packaging $0.27
ABG Asbury Automotive $4.11
ATHM Autohome $9.54
MDC MDC $1.73
PFE Pfizer $0.52
XOM Exxon Mobil $0.01
UPS United Parcel Service $2.14
BP BP $0.08
HCA HCA $3.57
RACE Ferrari $1.24
EMR Emerson Electric $0.68
ETN Eaton $1.21
COP ConocoPhillips -$0.25
IDXX Idexx Laboratories $1.39
SYY Sysco $0.34
MCK McKesson $4.14
MPC Marathon Petroleum -$1.27
SIRI Sirius XM $0.06
MPLX MPLX $0.63
CTLT Catalent $0.55
BR Broadridge Financial Solutions $0.71
ENTG Entegris $0.66
TECH Bio Techne $1.37
BEN Franklin Resources $0.72
LII Lennox International $2.65
MMP Magellan Midstream Partners $0.85
BABA Alibaba $20.59
SANM Sanmina $0.81
MTCH Match Group $0.50
DOX Amdocs $1.14
MANH Manhattan Associates $0.32
POWI Power Integrations $0.44
MKL Markel $9.04
TENB Tenable Holdings Inc $0.05
FEYE FireEye $0.10
EPAY Bottomline Technologies $0.28
ATGE Adtalem Global Education Inc $0.67
MRCY Mercury Systems $0.51
BRKS Brooks Automation USA $0.42
GL Globe Life Inc $1.72
APAM Artisan Partners Asset Management $1.02
AMGN Amgen $3.39
CB Chubb $2.82
EA Electronic Arts EA $2.94
CMG Chipotle Mexican Grill $3.73
PKI PerkinElmer $2.95
STE Steris $1.52
AMCR Amcor PLC $0.17
FBHS Fortune Brands Home Security $1.16
ATO Atmos Energy $1.57
BCH Banco De Chile $0.31
AMZN Amazon $7.16
GOOG Alphabet $15.70
GOOGL Alphabet $15.68
SMFG Sumitomo Mitsui Financial $0.19
ASEKY Aisin Seiki Co $1.19
SNE Sony $0.80
RCL Royal Caribbean Cruises -$5.04
TDG TransDigm $2.09
IT Gartner $0.82
QGEN Qiagen $0.66
NPSKY NSK ADR $0.19
JKHY Jack Henry Associates $0.88
IPHI Inphi $0.88
SWI Solarwinds $0.25
BDC Belden $0.75
ILMN Illumina $1.10
BP BP £0.01

 

Wednesday (February 3)

IN THE SPOTLIGHT: QUALCOMM

QUALCOMM: San Diego, California-based multinational corporation that creates an intellectual property, semiconductors, software, and services related to wireless technology is expected to report a profit of $2.10 in the fiscal first quarter, which represents year-over-year growth of over 110% from the same quarter last year when the company reported $0.99 per share.

The semiconductor company will report revenue of $80.3 billion, up over 60% from the year-ago quarter.

“We see an improvement in smartphone demand in 2021 after declining 5% in 2020 due to COVID-19. We also see 5G adding greater dollar content and supporting industry-wide handset volume growth. Qualcomm’s (QCOM) leadership in cellular technologies (3G/4G/5G) puts the company in a favourable position to maintain leading market share,” wrote Joseph Moore, equity analyst at Morgan Stanley.

“The potential elimination of a major competitor in the Chinese market, HiSilicon, should benefit QCOM as Huawei currently does not pay royalties. To the extent competitors that do pay royalties are able to pick up market share, that would be beneficial for QCOM.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 3

Ticker Company EPS Forecast
ABBV AbbVie $2.85
LAD Lithia Motors $5.23
APTV Aptiv PLC $1.01
HUM Humana -$2.37
BIP Brookfield Infrastructure $0.10
HWM Howmet Aerospace Inc $0.17
GWW Grainger $3.84
SC Santander Consumer USA $1.10
BIIB Biogen $4.75
CHKP Check Point Software Technologies $2.11
LFUS Littelfuse $1.58
BSX Boston Scientific $0.31
DT Dynatrace Holdings $0.13
SPOT Spotify -$0.53
APO Apollo Global Management $0.50
INGR Ingredion $1.46
SMG Scotts Miracle-Gro -$0.77
CPRI Capri Holdings Ltd $0.97
MSGS Madison Square Garden Sports -$1.67
EVR Evercore Partners $1.93
EPD Enterprise Products Partners $0.50
SLAB Silicon Laboratories $0.74
ASH Ashland $0.69
MUSA Murphy USA $2.14
ALGT Allegiant Travel -$2.27
BSMX Santander Mexico Fincl Gp Sab Decv $0.14
CENTA Central Garden Pet -$0.01
RGLD Royal Gold Usa) $0.86
ALGN Align Technology $2.14
AXTA Axalta Coating Systems $0.43
THG Hanover $2.34
AFL Aflac $1.05
KLAC KLA-Tencor $3.18
MAA Mid-America Apartment Communities $0.59
GRUB GrubHub $0.07
AVB AvalonBay Communities $0.85
CTSH Cognizant Technology Solutions $0.90
VVV Valvoline Inc $0.37
RYN Rayonier $0.05
QCOM Qualcomm $2.10
LNC Lincoln National $1.92
MET MetLife $1.52
CTVA Corteva Inc -$0.05
UHAL Amerco $0.12
QRVO Qorvo $2.66
MXL MaxLinear $0.36
ANGI Angie’s List -$0.02
HI Hillenbrand $0.73
CCMP Cabot Microelectronics $1.73
UGI UGI $1.13
KLIC Kulicke And Soffa Industries $0.71
AFG American Financial $2.13
IEX IDEX $1.31
FORM FormFactor $0.39
EBAY eBay $0.83
MITSY Mitsui & Company $7.96
LGND Ligand Pharmaceuticals $0.99
RAMP Liveramp Holdings Inc $0.06
NVO Novo Nordisk A Fs $0.60
TMHC Taylor Morrison Home $0.82
AVY Avery Dennison $2.08
SAVE Spirit Airlines -$1.40
GSK Glaxosmithkline $0.62
IRBT Irobot $0.21
COTY Coty $0.09
PAG Penske Automotive $2.11
COHR Coherent $0.78
DTE DTE Energy $1.33
ENSG Ensign $0.79
FLO Flowers Foods $0.24
SKM Sk Telecom $0.22
IBA Industrias Bachoco Sab De Cv $0.63
NEU NewMarket $5.60
BBD Banco Bradesco $0.11
PYPL PayPal $1.00
NMR Nomura $0.18
BSBR Banco Santander Brasil $0.17
SAN Banco Santander $0.06

 

Thursday (February 4)

Ticker Company EPS Forecast
GPI Group 1 Automotive $5.94
ALXN Alexion Pharmaceuticals $2.58
NYT New York Times $0.34
BCE BCE (USA) $0.59
BMY Bristol-Myers Squibb $1.41
NJR New Jersey Resources $0.46
PM Philip Morris International $1.21
CMI Cummins $2.80
TPR Tapestry Inc $0.99
ARW Arrow Electronics $2.67
CMS CMS Energy Corporation $0.55
BAX Baxter International $0.75
YUM Yum Brands $1.01
CG Carlyle $0.44
CLX Clorox $1.77
AGCO AGCO $1.12
MPW Medical Properties $0.27
ABB ABB $0.18
JHG Janus Henderson Group PLC $0.73
CI Cigna $3.66
MMS Maximus $0.91
MRK Merck & Co $1.38
WEC Wisconsin Energy $0.73
XYL Xylem $0.68
TW Towers Watson $0.33
PENN Penn National Gaming $0.26
HSY Hershey $1.43
PH Parker-Hannifin $2.60
ICE Intercontinental Exchange $1.08
BSAC Banco Santander Chile $0.34
RL Ralph Lauren $1.64
SNA Snap-On $2.94
DGX Quest Diagnostics $3.98
ODFL Old Dominion Freight Line $1.57
COR CoreSite Realty $0.45
WD Walker & Dunlop $1.47
TKR Timken $0.92
IP International Paper $0.81
AME Ametek $1.03
BLL Ball $0.78
PBH Prestige Brands $0.77
ABC AmerisourceBergen $1.94
APD Air Products & Chemicals $2.18
LEA Lear $3.43
LANC Lancaster Colony $1.48
PTON Peloton Interactive, Inc. $0.08
SU Suncor Energy USA -$0.17
SKX Skechers USA $0.32
MTD Mettler Toledo International $8.72
PCTY Paylocity $0.25
ARWR Arrowhead Research -$0.22
SNAP Snap -$0.07
FTV Fortive Corp $0.62
NWSA News Corp $0.09
DECK Deckers Outdoor $7.06
EXPO Exponent $0.28
FTNT Fortinet $0.97
ALL Allstate $3.83
MDU MDU Resources $0.54
SYNA Synaptics $2.13
TDC Teradata $0.25
FLT Fleetcor Technologies $2.82
NBIX Neurocrine Biosciences $0.59
POST Post $0.71
CSL Carlisle Companies $1.16
NOV National Oilwell Varco -$0.14
GILD Gilead Sciences $2.01
WERN Werner $0.78
ESS Essex Property $1.02
CPT Camden Property $0.35
MPWR Monolithic Power Systems $1.24
WWE World Wrestling Entertainment $0.29
LPLA LPL Financial $1.33
OFC Orate Office Properties $0.38
ZEN Zendesk $0.15
MTX Minerals Technologies $0.91
PFPT Proofpoint $0.42
MSI Motorola Solutions Msi $2.74
COLM Columbia Sportswear $1.24
ATVI Activision Blizzard $1.17
F Ford Motor -$0.08
UNM Unum $1.19
HIG Hartford Financial Services $1.33
PRU Prudential Financial $2.57
DXC DXC Technology Co $0.54
KB Kb Financial $1.50
CHT Chunghwa Telecom $0.36
MCHP Microchip Technology $1.58
NWS News $0.09
AIV Apartment $0.67
SSUMY Sumitomo ADR $0.26
DB Deutsche Bank -$0.03
OHI Omega Healthcare Investors $0.41
KWHIY Kawasaki Heavy Industries ADR -$0.18
PFSI Pennymac Financial Services $5.90
TRNO Terreno Realty $0.37
BCO Brinks $1.04
VSAT Viasat $0.02
YAMCY Yamaha DRC $0.47
RDSA Royal Dutch Shell £0.17
NRZ New Residential Investment $0.33
RICOY Ricoh Company -$0.06
WYNN Wynn Resorts -$2.29
ITOCY Itochu ADR $1.87
TOT Total $0.46
MYGN Myriad Genetics -$0.12
BDX Becton, Dickinson and Co. $3.07
ARNC Arconic Inc $0.32
TM Toyota Motor $3.65
RHHBY Roche Holding ADR $1.28
CDW CDW $1.53
ARRY Array Biopharma $0.05
HL Hecla Mining $0.02
TWOU 2U -$0.10
ALNY Alnylam Pharmaceuticals -$1.88
DD DuPont $0.85
CARR Carrier Global Corp $0.37
OMVJF OMV $0.74
TPL Texas Pacific Land $4.54
AUOTY AU Optronics $0.27

 

Friday (February 5)

Ticker Company EPS Forecast
HRC Hill-Rom $1.05
ADNT Adient PLC $0.87
TT Trane Technologies PLC $0.92
LAZ Lazard $0.97
SNY Sanofi $0.69
EL Estée Lauder $1.68
LIN Linde PLC $2.16
AON AON $2.46
ZBH ZIMMER BIOMET HDG. $2.07
ITW Illinois Tool Works $1.79
REGN Regeneron Pharmaceuticals $8.23
CAH Cardinal Health $1.44
SPB Spectrum Brands $0.75
BERY Berry Plastics $0.94
HMC Honda Motor $0.75
NFG National Fuel Gas $0.99
CHBAY Chiba Bank ADR $0.77
SOMLY Secom ADR $0.26
ASX Advanced Semiconductor Engineering $0.12
BNPQY BNP Paribas ADR $0.55
FE FirstEnergy $0.50

 

Blame it on The Nasdaq

US data announced this week showed a significant recovery in building permits and housing, building permits (MoM) for July surged to 18.8% compared to the previous 3.5%, Housing Starts data revealed 22.6% which is 5.1% higher than the previous month, existing-home sales data were as well positive reported beyond expectations.

Despite the negative Jobless claims and Philadelphia Fed Manufacturing PMI reported on August 20, Manufacturing PMI and Services PMI demonstrated a significant improvement, which led major US Indices to surge whereas S&P500 and Nasdaq100 reached the all-time high.

US stocks continue hitting records, Tesla surged by 24.19% breaking the significant $2000 per share value, and is now worth more than $382 billion surpassing Walmart by nearly $10B. Nasdaq’s top company by market cap – Apple gained 8.23% hitting the $2127B in capitalization. Tesla and Apple remain the top popular shares last week based on Robinhood data.

S&P500 closed above the all-time high, some might think that there is a possible double top pattern, economic recovery of the US indicates that the index may continue the run towards $3500.

Nasdaq owes its gains not only to Tesla and Apple, but there are also other tech companies that surged last week and during the pandemic, such as NVIDIA, AMD, Qualcomm, Microchip Tech, Texas Instruments.

An hourly chart demonstrates that the correction is most likely will happen as the price touched the dynamic resistance and the fifth wave of an ending diagonal is about to complete at 11600. Ending diagonal is a trend reversal pattern, which usually demonstrates exhaustion of bulls, note the evening star doji, though the closing is above the previous close, it still shows uncertainty and exhaustion.

NDX chart by TradingView

How is it related to cryptocurrencies and Bitcoin?

Bitcoin and Ethereum price actions are considered as cryptocurrency market movers. Since Bitcoin is nowadays considered as the digital Gold and Ethereum as a digital Silver, their price action now is correlated to US data which effect Gold. Gold was ever since used as a safe-haven to hedge funds during the uncertain times and inflation, so is Bitcoin now.

An hourly chart of Bitcoin indicates that the price could decline further to towards $11200 – $11160 to complete the Head and Shoulders pattern, another pattern to watch is an ending diagonal which is yet to be completed as well. Bitcoin remains below the major resistance level of $11700 an in order to show another bull run it must break the dynamic resistance (ending diagonals upper edge) and close above the 11700, however testing 11200 might bring another stimulus for bulls.

BTCUSD price on Overbit

Ethereum plummeted to $380 after reaching the year’s maximum at $446.67, loosing 9.7% this week only. Digital Silver price is following a similar ending diagonal pattern, and if the upper dynamic resistance and a static resistance of 397 is not overpassed, ETH might continue the drop towards a major support at $380, and if that support is broken, towards $370 – 369.

ETHUSD price on Overbit

Unlike Bitcoin, Gold lost only 0.20% in price for the week. A significant drop was on Wednesday August 19 ahead of US data announcements, where the precious metal lost 3.67% after gaining 2.97% on Monday and Tuesday.

Head and shoulders pattern is identified on an hourly chart of Gold and the price might continue the drop down to $1881.60 – 1880, where if the support laid on those level withheld the price might retrace towards 2014 and if above towards 2046, where the bearish pattern will be completed.

Gold price on Overbit

Since Gold and Silver prices demonstrate similarities in their price action, the same Head and Shoulders is visible on an hourly chart of XAGUSD. The price is below the dynamic support of August 12 which might signal to a further decline down to $25.30.

Silver price on Overbit

The price continues the short-term downtrend move inside a descending channel, which in other had forms another controversial to the H&S pattern of Bullish Flag.

Silver price on Overbit

If bulls are able to push the price above the dynamic support and if the dynamic resistance is overtaken at $27, the bullish run might proceed towards $28 – 28.50.

Key takeaways for the upcoming week would be announcements from Eurozone, Great Britain, China and the US.

Important announcements to watch:

Tuesday, August 25, 2020

German GDP (YoY) as per Second quarter data is expected to be -11.7%, 9.8% lower than the previous -1.9%

German GDP (QoQ) as per Second quarter data is expected to be -10.1%, 7.9% lower than the previous -2.2

US CB Consumer Confidence (August) is expected to be 93, 0.4 points higher than the previous 92.6

US New Home Sales (July) is expected to be 786K, 10K higher than the previous 776K

Wednesday, August 26, 2020

US Core Durable Orders is expected to be 2.1%, 1.5% lower than the previous 3.6%

Thursday, August 27, 2020

US GDP (QoQ) as per 2nd Quarter is expected to be -32.6%, 0.3% higher than the previous -32.9%

US Initial Jobless Claims is expected to be 1,000K, 106K lower than the previous 1,106K

US Pending Home Sales (MoM) as per July is expected to be 4.5%, 12.1% points higher than the previous 16.6%

Asides from the data to be announced, there are other important events to trace.

Republican National Convention, which will be held on Monday, in which delegates will determine the nominees for the upcoming presidential elections. Markets will be watching this event closely as during the current campaign Democrats are having an edge over republicans.

Source: Yahoo Finance

Another major event would be an annual Jackson Hole conference this Thursday, August 27, where FED Chairman Jerome Powell will speak about current economic situation, inflation targets and possibly share preliminary focus on interest rate change.

The economic state and inflation in the US once again are an important constituent of the Global economy and global markets, all these events will be decisive for the mid-term price movements for the US Indices, commodities and cryptocurrencies.

Qualcomm Lobbies Trump Administration to Sell Chips for Huawei 5G Phones; Target Price $115

Qualcomm Inc, a multinational semiconductor and telecommunications equipment company, is lobbying the United States government to roll back restrictions on the sale of advance components to Huawei Technologies Co. after the Commerce Department blacklisted the Chinese telecom giant, according to The Wall Street Journal report.

The Chipmaker is lobbying to sell chips to Huawei that the Chinese company would include in its 5G phones. With those restrictions, the U.S. has handed Qualcomm’s foreign competitors a market worth as much as $8 billion annually, the company said in the presentation, the WSJ said.

“We are very positive about Qualcomm’s competitive positioning and the strength of 5G, which is continuing its rollout globally. We raise our target price to $130, 20x our FY21E as the company continues to overachieve expectations. Our rating and target price assume that the S&P 500 remains unchanged over the next 12 months,” said Louis Miscioscia, equity analyst at Daiwa Capital Markets America.

Qualcomm stock forecast

Twenty-one analysts forecast the average price in 12 months at $115.12 with a high forecast of $137.00 and a low forecast of $90.00. The average price target represents a 6.35% increase from the last price of $108.25. From those 21, 13 analysts rated ‘Buy’, seven analysts rated ‘Hold’ and one rated ‘Sell’, according to Tipranks.

Morgan Stanley target price is $121 with a high of $139 under a bull scenario and $58 under the worst-case scenario. Qualcomm had its price target lifted by Royal Bank of Canada to $106 from $81. They currently have a sector perform rating on the wireless technology company’s stock.

Several other equity analysts have also updated their stock outlook. Deutsche Bank lifted their price target to $115 from $100 and gave the stock a buy rating. Canaccord Genuity lifted their price target to $115 from $102 and gave the stock a buy rating.

We think it is good to buy at the current level and target at least $115 as 100-day Moving Average and 100-200-day MACD Oscillator signal a strong buying opportunity.

Analyst comment

“We see an improvement in smartphone demand in 2H20 after bottoming 1H20 due to Covid-19. We also see 5G adding greater dollar content and supporting industry-wide handset volume growth. QCOM’s leadership in cellular technologies (3G/4G/5G) puts the company in a favourable position to maintain leading market share,” said Joseph Moore, equity analyst at Morgan Stanley.

“The potential elimination of a major competitor in the Chinese market, HiSilicon, should benefit QCOM as Huawei currently does not pay royalties. To the extent competitors that do pay royalties are able to pick up market share, that would be beneficial for QCOM,” the analyst added.