Citi Research analyst Christopher Danely downgraded the shares of Qualcomm Inc. QCOM,
to buy neutral on Thursday, following what he called a “mixed” earnings report. While Qualcomm exceeded Danely’s expectations with its fiscal revenue and earnings per share in the first quarter, gross margins slowed and were below its estimates. “We updated QCOM last year based on stock earnings and the 5G update cycle,” wrote Danely. “We believe that the advantage is over and we expect more disadvantage situations, such as lower margins.” He argued that Qualcomm’s margins were under pressure during the 4G wave as the update cycle “matured”, a trend he hopes to repeat with the 5G update cycle. Danely lowered Qualcomm’s target price from $ 194 to $ 165. The shares fell 8% in Thursday morning trading. They have increased by 17% in the past three months as the S&P 500 SPX,
increased by 12%.
