What happened
Shares of Qualcomm (QCOM +0.40%) were trading about 6% lower at 2 p.m. ET Friday after a JPMorgan analyst removed the semiconductor giant from its "analyst focus list," indicating that the firm no longer sees it as a top stock with meaningful upside from its current price.
So what
JPMorgan analyst Samik Chatterjee also dropped tech titan Apple (AAPL 1.65%) from the focus list. He noted that demand for high-end smartphones has weakened in recent months, which is bad news for both handset makers like Apple and phone component suppliers such as Qualcomm. The market's softness is also being amplified by the continued shortage of chip-manufacturing capacity and other supply-side issues. Therefore, Chatterjee isn't feeling bullish on Apple or Qualcomm right now. The iPhone maker reacted less noticeably to the analyst's note, trading less than 1% lower.
Image source: Getty Images.
Now what
Chatterjee first placed Qualcomm on the analyst focus list in December with a price target of $225 per share. That rating was reiterated in February based on signs of improvement in the supply chain at the time. Now, it seems he has run out of patience with his errant pick, which closed Thursday's session trading 32% below that price target.
I'm not so sure that this is the right call, though. Yes, Qualcomm faces some near-term market issues thanks to a number of factors beyond its control, like the war in Ukraine and the long-running manufacturing slowdown. However, the company's long-term business prospects are still quite bright due to the global rollout of 5G wireless networks, the rising popularity of WiFi 6 systems, and a groundswell of devices coming into use under the Internet of Things banner. Qualcomm has several long-term growth drivers in its pocket, and the stock trades at just 12 times forward earnings today. That's a steal in my book.
