Christiti Danely, analyst at Citi Research, downgraded the shares of Qualcomm Inc., QCOM.
to neutral from buy Thursday following what he calls a ‘mixed’ earnings report. Although Qualcomm exceeded Danely’s expectations with its fiscal earnings and earnings per share in the first quarter, gross margins declined and fell below its estimates. “We upgraded QCOM last year based on the rise in equities and the 5G upgrade cycle,” Danely wrote. “We believe the upside is over, and we expect more cases of downside such as the lower margins.” He argued that Qualcomm’s margins came under pressure during the 4G wave as the upgrade cycle ‘expired’, a trend it is expected to repeat with the 5G upgrade cycle. Danely lowers its price target on Qualcomm’s share from $ 194 to $ 165. The shares are down 8% on Thursday morning. They have risen 17% over the past three months as the S&P 500 SPX,
increased by 12%.
