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Qorvo Inc. (QRVO) is a specialized semiconductor company that designs, develops, and commercializes radio frequency (RF) solutions and core technologies for the mobile, infrastructure, and aerospace and defense industries. They specialize in radio frequency filters, front-end modules, and power amplifiers used in smartphones, as well as a range of products for the non-smartphone end market, such as wireless base stations, cable TVs and networking equipment, and military applications.
Born from the merger of RF Micro Devices and TriQuint Semiconductors, Qorvo is valued at $9.56 billion by market cap, and has its headquarters in Greensboro, North Carolina.
QRVO stock is down 11.3% YTD, and has given up 17.8% since setting a new 52-week high in early March. Most of that decline is due to a negative earnings reaction, with QRVO cratering 14.5% in a single session earlier this month after its fiscal Q4 results.
Following its steep sell-off, Qorvo stock looks cheap. The stock is valued at 16.11x forward earnings and 2.46x sales, which is cheaper than its historical average valuations, as well as the tech sector medians.
Why Did QRVO Tank After Earnings?
Qorvo released its Q4 results on May 1, with the quarterly profit of $1.39 per share outperforming Wall Street estimates of $1.21 per share. Revenue came in at $941 million, which also surpassed consensus estimates. For the full year, Qorvo reported a loss of $0.72 per share on revenue of $3.7 billion.
Despite topping Q4 estimates, the stock dipped after Qorvo issued weak guidance. The chipmaker expects fiscal Q1 revenue between $825 million to $875 million, with earnings of $0.60 to $0.80 per share. The guidance came as a disappointment, with Wall Street anticipating revenue of $923 million on earnings of $1.30 per share.
What Do Analysts Think About QRVO?
After the weak forecast, many analysts lowered their price targets for the chipmaker, though they don't seem too downbeat overall on QRVO.
Benchmark lowered its target from $136 to $128, but analyst Cody Acree, backed a “Buy” rating. “The sequential decline expected in the June quarter revenue guidance primarily reflects the annual ramp patterns of new product releases at the company's two largest smartphone customers in Qorvo’s Advanced Cellular Group, and the seasonal timing of large Defense & Aerospace programs in the firm’s High-Performance Analog business unit," said Acree.
Similarly, Mizuho maintained its “Neutral” rating and lowered its target to $105 from $115. The firm chalked up the soft June guidance to seasonal trends, and said it anticipates a stronger second half.
Lastly, Stifel analyst Ruben Roy reiterated both a “Hold” rating and $115 target, saying, “We believe that QRVO is executing well on content gains at Apple (AAPL) and into flagship and mid-tier Android smartphones.”
Analysts have a consensus “Hold” rating for the stock, with 5 “Strong Buy” ratings, 2 “Moderate Buy” ratings, 13 “Hold” ratings, 1 “Moderate Sell” rating, and 2 “Strong Sells” on the chipmaker.
This group now has a mean price target of $109.65, signifying an upside potential of 9.7% from current levels.
On the date of publication, Ruchi Gupta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
