The Consensus EPS Estimates For QUALCOMM Incorporated (NASDAQ:QCOM) Just Fell Dramatically

Today is shaping up negative for QUALCOMM Incorporated (NASDAQ:QCOM) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the latest downgrade, the 24 analysts covering QUALCOMM provided consensus estimates of US$40b revenue in 2023, which would reflect an uncomfortable 8.9% decline on its sales over the past 12 months. Statutory earnings per share are supposed to plunge 24% to US$8.83 in the same period. Previously, the analysts had been modelling revenues of US$47b and earnings per share (EPS) of US$11.59 in 2023. Indeed, we can see that the analysts are a lot more bearish about QUALCOMM's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Our analysis indicates that QCOM is potentially undervalued!

The consensus price target fell 7.6% to US$163, with the weaker earnings outlook clearly leading analyst valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on QUALCOMM, with the most bullish analyst valuing it at US$250 and the most bearish at US$120 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 8.9% by the end of 2023. This indicates a significant reduction from annual growth of 15% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 7.4% per year. It's pretty clear that QUALCOMM's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of QUALCOMM.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with QUALCOMM, including concerns around earnings quality. Learn more, and discover the 1 other risk we've identified, for free on our platform here.

We also provide an overview of the QUALCOMM Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.