Analyst Note| Abhinav Davuluri, CFA |
Qualcomm reported fiscal second-quarter results at the high end of management’s guidance, with the firm benefiting from the ongoing ramp-up of 5G smartphones. Chipset, or QCT, sales were boosted by Apple’s 5G iPhone 12, which features Qualcomm’s modem and other content such as a transceiver and subsystem for the sub-6 GHz portion of the overall 5G module. For calendar 2021, management expects high-single-digit unit growth for smartphones, with 450 million-550 million 5G handset shipments. The shares of narrow-moat Qualcomm were up 5% after hours on April 28 and now trade modestly above our unchanged fair value estimate of $136. We recommend prospective investors seek a wider margin of safety.