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Telecom Stocks Earnings Roster for Nov 4: QCOM, QRVO & ACIA

The overall Technology sector, of which Telecom is an essential part, is likely to report relatively healthy third-quarter 2020 earnings compared with other sectors. Despite COVID-19-induced supply chain disruptions affecting normal business operations of several telecom firms, the sector appears to have been well placed with digital sustainability being the norm of the day. Better-than-expected sector revenues with a faster pace of 5G deployment and rapid proliferation of IoT devices amid rising work-from-home trend instill confidence.

Although the sector appears to have overcome the ‘supply shock’ caused by factory shutdowns and travel restrictions through partial resumption of business activities, profitability has largely been compromised. Various trade restrictions on grounds of national security concerns have eroded sector margins, while higher infrastructure investments for 5G networks have increased operating costs. Upfront capital investments for 5G have proven to be substantially higher than prior generations of wireless deployments due to network density requirements, potentially hurting return of capital metrics.

To sum up, although technological advances have changed the way consumers communicate resulting in higher home data consumption and video streaming, intense competition and commoditization of services have limited the chances of benefiting from these trends.   

Per the latest Earnings Preview, total earnings for the Technology sector for the September quarter are expected to be up 8.8% on 6.7% higher revenues year over year. This compares favorably with the prior quarter’s earnings contraction of 0.4% on 4.1% revenue growth.

Let’s take a look at three Telecom stocks that are slated to report quarterly results on Nov 4.

Qualcomm Incorporated QCOM is scheduled to report fourth-quarter fiscal 2020 results after the closing bell. For the fourth quarter, Qualcomm expects non-GAAP revenues of $5.5-$6.3 billion as the virus outbreak is likely to result in a 15% reduction in handset shipments compared to prior expectations. The Zacks Consensus Estimate for the same is pegged at $5,935 million. The company recorded revenues of $4,814 million in the year-earlier quarter. Management anticipates non-GAAP earnings of $1.05-$1.25 per share. The consensus mark for earnings is currently pegged at $1.19 per share. Qualcomm recorded non-GAAP earnings of 78 cents per share in the prior-year quarter.

Our proven model predicts an earnings beat for Qualcomm this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is perfectly the case here.

Qualcomm currently has an Earnings ESP of +5.26% and a Zacks Rank #3.

QUALCOMM Incorporated Price and EPS Surprise

QUALCOMM Incorporated price-eps-surprise | QUALCOMM Incorporated Quote

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

During the fiscal fourth quarter, Qualcomm unveiled the Snapdragon 732G Mobile Platform featuring Elite Gaming and 4th-generation AI Engine for intuitive interactions and predictive user experiences. Designed to deliver immersive gameplay powered by an upgraded GPU and CPU compared with the preceding generation, it offers outstanding LTE download and upload speeds in addition to Wi-Fi performance. The company also launched next-generation connected smartwatches — Wear 4100+ and Wear 4100. Based on ultra-low power hybrid architecture to deliver super-fast performance and connectivity, the products are likely to capitalize on the solid growth trend of the wearables industry. These are likely to have translated into incremental revenues for the company in the quarter under review.

Qorvo Inc. QRVO is scheduled to report second-quarter fiscal 2021 results, after the closing bell. The company expects second-quarter fiscal 2021 revenues in the range of $1-$1.03 billion. The consensus mark for revenues is pegged at $1.01 billion, which suggests an improvement of 25.4% from the year-ago quarter’s reported figure. Non-GAAP adjusted earnings are anticipated to be $2.14 per share at mid-point for the fiscal second quarter. The Zacks Consensus Estimate for fiscal second-quarter earnings is also pegged at $2.14 per share, unchanged in the past 30 days. The figure indicates an improvement of 40.8% from the year-ago quarter’s reported figure.  

Qorvo currently has an Earnings ESP of 0.00% and a Zacks Rank #2.

Qorvo, Inc. Price and EPS Surprise

Qorvo, Inc. price-eps-surprise | Qorvo, Inc. Quote

You can see the complete list of today’s Zacks #1 Rank stocks here.

The solid traction for Qorvo’s mid-high-band and ultra-high band front end modules, which have been powering 5G smartphone launches, is expected to have contributed to the company’s fiscal second-quarter performance. Solid uptake of Bulk Acoustic Wave filters, with the reopening of economies, is expected to have had driven top-line growth.

Acacia Communications, Inc. ACIA is slated to report third-quarter 2020 results. The consensus mark for revenues is pegged at $143 million, which implies a year-over-year improvement of 19.2%. The Zacks Consensus Estimate for earnings is pegged at 67 cents, which indicates 11.7% growth from the year-ago quarter’s reported figure.

Acacia currently has an Earnings ESP of 0.00% and a Zacks Rank #3.

The company is likely to have benefited from innovative product launches in 100G coherent point-to-point edge and access solutions market. These user friendly products offer low laser emission, wide tolerance range and rich monitoring and diagnostic features.

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QUALCOMM Incorporated (QCOM): Free Stock Analysis Report
 
Qorvo, Inc. (QRVO): Free Stock Analysis Report
 
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