Qualcomm Inc. (QCOM)_ FQ3'22 Wrap_ QTR beat but FQ4 guidance miss; High-end demand resilient even as handset market expectati...(1)

Key Data __________________________________ GS Forecast ________________________________ GS Factor Profile ____________________________ Source: Company data, Goldman Sachs Research estimates. See disclosures for details.   Revenue($mn)Old33,467.044,272.346,717.649,122.5 EBITA($mn)13,352.018,766.619,034.119,907.0 EBIT($mn)11,770.017,083.017,364.118,192.1  EPS($)Old6.7710.8111.0911.86 P/E(X)20.713.213.712.9 ividendyield(%)1.91.92.02.1 Netdebt/EBITA(X)0.20.3(0.1)(0.6)  EPS($)3.292.743.262.54QCOMrelativetoAmericasCoverageQCOMrelativetoAmericasHardwareandCommunicationsTechnologyGrowth FinancialReturnsMultipleIntegrated Percentile20th40th60th80th100th Qualcomm reported FQ3 revenue and EPS ahead of slightly ahead of our estimate and consensus. However, the company guided FQ4 revenue and EPS about 5% lower than consensus and 3% lower than our estimate. Importantly, QCT guidance implies only 4% Q/Q growth in FQ4 vs. 19% and 30% for the prior two years. Qualcomm indicated that the weaker QCT guidance is more linked to weakness in mid and low tier smartphones than the high end. Qualcomm also lowered their smartphone shipment forecasts to mid-single digit decline in 2022 and brought down their 5G phone shipments estimate for 2022 to between 650m to 700m units again driven by low/mid tier weakness. On a positive note, Qualcomm announced an expanded license agreement with Samsung through 2030 at an unchanged royalty rate. Management also highlighted optimism for higher market share in future versions of Samsung Galaxy S phones. Commenting on IoT, the company talked about impact from the weaker consumer in the near-term but re-iterated FY’24 revenue guidance of up to $9bn for the segment. While RFFE performance is trending weak given lower 5G shipments, Automotive demand is strong with a solid pipeline. We see these earnings as a better than feared outcome for Qualcomm and would expect the shares to be neutral to up on these results. Premium & high tier demand resilient. Similar to the past few nquarters Qualcomm called out resilience in premium & high tier smartphones even though low & mid tier volumes are being impacted by weaker demand. Management noted that their FQ4 guidance (to Sept) does not assume any deterioration in this high end demand and indicated that they have good visibility on OEM orders for the quarter. Handset market guidance lowered driven by oweakness at lower tiers. Qualcomm has lowered their QCOM12mPrieTarget:$188.00Prie:$153.42Upside:22.5%Qualcomm Inc. (QCOM) FQ3’22 Wrap: QTR beat but FQ4 guidance miss; High-end demand resilient even as handset market expectations lowered28 July 2022 | 12:06AM PDT Goldm