Qualcomm Question: Where to Upgrade?
Let's review several consensus EPS expectations, updated portfolio panic points and where and why we would boost QCOM's rating.
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As earnings season is now in high gear, let's review our updated consensus earnings per share expectations to key portfolio stocks, adjustments to our panic points and why we're watching Qualcomm QCOM for a potential rating upgrade.
EPS Updates
With reporting expected from Alphabet GOOGL, Lockheed Martin LMT, ServiceNow NOW, United Rentals URI, and Waste Management WM, we are likely to see more movement in some of these EPS figures when we present an updated table next week. Notable earnings per share shifts include:
- Builders FirstSource’s BLDR 2025 EPS increasing to $3.67 from $3.55.
- Morgan Stanley’s MS 2024 EPS now sits at $6.99 vs. the prior $6.87. For 2025, the market now sees Morgan delivering EPS of $7.65, a nickel higher than before.
- Despite the recent weakness in its shares, Nvidia’s NVDA 2025 EPS has been lifted to $3.71 from $3.62.
- Last week’s impressive results from Taiwan Semiconductor TSM supported the vibrant demand picture for Nvidia, Marvell MRVL, and Qualcomm.
Adjusting Pain Points
Given the cumulative move in some of our holdings over the last month, such as the double-digit moves in United Rentals URI and Builders FirstSource BLDR shares over the last month, we are making some panic point adjustments as follows:
- Following Apple’s more than 8% move in the last several weeks, we’re upping our panic point to $185 from $175
- For Builders FirstSource, we’re lifting our panic point to $120 from $115, which leaves a wide berth. We’re doing this given concerns the market could be getting ahead of itself with its expectation for as many as three rate cuts this year.
- ServiceNow NOW shares have been a champ since we added to the portfolio in early June, soaring more than 13%. That gives us some room to inch up our panic point to $615 from $585 ahead of the company’s earnings report later this week.
- The big move in URI shares leads us to increase our panic point to $585 from $550. We continue to see the company benefiting from infrastructure spending and an improving housing construction market as the Fed returns monetary policy to a more neutral level.
- Same goes for the non-residential business of Waste Management WM. Here too, those shares have quietly climbed double digits since mid-June, leading us to up our panic point to $183 from $178.
As we shared in Friday’s Roundup, when Waste reports its quarterly results this week, we’ll be looking for further margin improvement reflecting the wider rollout of automated trucks. We’ll also be looking for concrete plans for how Waste will lift the margins at Stericycle SRCL, a company it expects to acquire. What we learn on both counts may give us room to boost our $230 price target.
Where We Might Upgrade Qualcomm
Qualcomm is now flirting with the 100-day moving average near $185. Should the shares successfully test that level, we may revisit the current "Two rating," because of the upside to our $255 target. TSM’s June-ending quarter results and guidance as well as that from Micron MU confirmed the expected PC and smartphone upgrade cycle, thanks in part to the move to artificial intelligence on devices. Qualcomm has had an extremely strong position in the smartphone market, but its position in the PC space is a relatively new opportunity for the company.
Remember, through its Snapdragon chipset platform, Qualcomm is partnering with Microsoft MSFT on Copilot +PCs. This means we’ll be paying close attention to comments from Microsoft about the rollout and expected adoption of those PCs when it reports on July 30, ahead of Qualcomm’s earnings report on July 31.
TheStreet Pro Portfolio is long GOOGL, LMT, NOW, URI, WM, MS, NVDA, MRVL, QCOM, MU, MS, BLDR.
