QCOM: Raymond James, Goldman Cut Targets; Jefferies Sees Slowing Smartphones

More sobering words this morning for the outlook on smartphones, and for wireless chip maker Qualcomm (QCOM), in particular.

Jefferies & Co.’s Peter Misek writes that his “checks” suggest “an unexpected slowdown in smartphone sales” along with a “further deterioration in PC demand.”

Component orders for phones are being cut, he writes:

Based on our checks with the Asian mobile phone supply chain, we believe Samsung, Huawei, and ZTE have cut component orders by 5% to 10%. We believe HTC also cut orders by 10% to 15% and RIM and Nokia cut orders by 15% to 20%. We believe the impact from these order cuts will be realized in Q3 (Sep). Refer to Exhibit 9 for our revised Handset Model which incorporates our estimates for 2013.

Over to Tavis McCourt of Raymond James, who reiterates an Outperform rating on shares of Qualcomm, but cuts his price target to $69 from $73.

McCourt cut his September EPS estimate to 86 cents from $1.03, below the Street consensus of 90 cents, though he thinks Qualcomm’s outlook for this quarter, at 83 cents to 89 cents a share in non-GAAP profit, is realistic. He’s sticking with an 87 cents estimate, in line with the Street.

For the full fiscal year ending in September, McCourt now models $18.92 billion in revenue and $3.07 per share in profit, down from $19.39 billion and $3.23.

Probably, the wireless industry will see little to no growth at all in this quarter and the September quarter, before snapping back in the fourth quarter of the year. That is the result of multiple factors, including Apple‘s (AAPL) now outsized impact on the smartphone business:

As calendar 2Q12 has progressed, it has become more clear that normal seasonal trends in the wireless handset industry are unlikely this year. We believe this is likely due to pent up demand for the iPhone 5 in developed markets as well as relatively weak economic trends globally. Due to Apple�s much larger influence on global handset trends vs. previous years, LTE supply issues pushing out industry volumes, and generally weak growth in emerging markets, we expect 2Q and 3Q handset volumes could be flattish from 1Q levels.

Qualcomm shares today are up 4 cents at $56.54.

Update:� Goldman Sachs’s Simona Jankowski also cut her target on Qualcomm, to $71 from $76, while reiterating a Buy rating, citing “soft” handset demand, and offering similar reasons:

Negative datapoints over the last couple of weeks,�including preannouncements from RIM, HTC, and�Nokia, and weaker shipments at Huawei and ZTE,�point to weaker handset demand, in particular in�Europe. That�s not surprising, as our analysis shows�that handset growth is 80% correlated to global�GDP. The macro weakness has been compounded�by the pause ahead of the iPhone launch, and a�tougher stance on subsidies and upgrade cycles by�carriers in N. America and Europe.

Jankowski sees Qualcomm turning in $3.75 in EPS this year, and $4.24 next year, down from $3.77 and $4.42.