Citi Research analyst Christopher Danely downgraded Qualcomm Inc.’s stock QCOM,
to neutral from buy Thursday, according to what he called a “mixed” earnings report. While Qualcomm exceeded Danely’s expectations with its first-quarter revenue and EPS, gross margins slowed to fall below its estimates. “We upgraded QCOM last year based on a positive impact on equity earnings and the 5G upgrade cycle,” Danely wrote. “We think the benefit is over and expect more downturns like the lower margins.” He argued that Qualcomm’s margins came under pressure during the 4G wave as the upgrade cycle “matured,” a trend he expects to repeat with the 5G upgrade cycle. Danely lowered his target price for Qualcomm stock from $ 194 to $ 165. The stock is down 8% in morning trading Thursday. They are up 17% in the last three months as the S&P 500 SPX,
is up 12%.