A Word of Caution on Surging Qualcomm Stock

QCOM is one of the worst stocks to own the week after Easter

Managing Editor
Apr 17, 2019 at 12:11 PM
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No stock has been as hot as Qualcomm, Inc. (NASDAQ:QCOM) these last two days, after the chipmaker settled its patent dispute with Apple (AAPL). As part of the settlement, Qualcomm signed a new six-year patent license deal with the iPhone maker, which would add over $25 billion in market cap. However, amidst this surge up the charts, a slowdown could occur as soon as next week, if history is any guide. 

Per data from Schaeffer's Senior Quantitative Analyst Rocky White, Qualcomm stock is one of the worst stocks to own the week after Easter. Looking at the last 10 years, QCOM is down an average of 1.3% the week after Easter and is higher just 30% of the time. Supporting this bearish case is the security's 14-day Relative Strength Index (RSI), which closed last night at 90, indicating a short-term pullback may be in the cards.

At last check, the equity was up 9.7% to trade at $77.61, and earlier tapped a 19-year high of $82.52. The shares gained 23% yesterday when the Apple news first broke, toppling their 320-day moving average in the process, a trendline not conquered since early November. 

Daily Stock Chart QCOM

Qualcomm's ascent has triggered a wave of analyst attention today. Stifel, J.P. Morgan Securities, and Evercore all upgraded the chip stock to the equivalent of a "buy" rating, with Stifel's new price target of $100 sitting right at its record high. Four other brokerages issued price-target hikes as well, including to $95 at Susquehanna.

This flies in the face of the general analyst sentiment, with 11 of the 19 brokerages in coverage rating QCOM a tepid "hold." Plus, the security's consensus 12-month price target of $76.30 is now a discount from the current perch, implying there is ample room for more shifts in analyst sentiment. 

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