Qualcomm tumbles after signalling more pain from smartphone slump

(Reuters) – Qualcomm (NASDAQ:) tumbled nearly 9% on Thursday after a gloomy forecast signalled more pain for the largest maker of smartphone chips from the ongoing slump in the consumer electronics market.

The drop was set to erase about $13 billion from the company’s market value, based on the premarket share price of $117.7. The stock has risen 19% this year, but has underperformed the broader chip industry on worries about smartphone demand.

The company disappointed investors on Wednesday with a current-quarter revenue forecast that was below market estimates, as well as adjusted sales that missed expectations.

“Qualcomm’s results and guidance largely were unimpressive as the company is mired and pressured in handset units and global excess inventory at its customers,” Piper Sandler analysts wrote in a note.

Piper and other brokerages also flagged the lack of future “material” revenue from Huawei as a concern as Qualcomm does not have a license to sell its chips to the Chinese company.

“Huawei headwinds are new (and larger than we would have thought), and (Qualcomm) stock is admittedly un-sexy,” Bernstein analyst Stacy Rasgon said.

“At least the shares are inexpensive … But cheap by itself can be an unsatisfying thesis sometimes, and we could see it staying unloved for a while longer here.”

Qualcomm has a 12-month forward price-to-earnings ratio of 14.05, much lower than Nvidia (NASDAQ:)’s 43.94 and the industry median of 20.51.