Qorvo Inc (QRVO) Expected to Turn Around If It Weathers Current Storm

By Carrie Williams

qorvo logoQorvo Inc. (NASDAQ: QRVO), the leading provider of innovative Radio Frequency solutions, announced a disappointing guidance and a mixed earnings report yesterday. QRVO had reported EPS of $1.29 which was $0.12 lower than estimated, and revenue of $863.7 million (+22.1% YoY) which beat estimates by $28.93 million. The company’s outlook for third-quarter revenue was $800 million – $840 million, which is less than the consensus estimate of $844 million. Consequently, analysts at BMO Capital Markets lowered Ambrish Srivastava his price target from $66 to $61 while maintaining their Outperform rating on the stock. The new PT is an upside of 19.4% from the last close price of $51.08.

The weaker-than-expected gross profit margin was just the latest in the series of disappointing news about Qorvo Inc. However, if the company exhibits sustainable improvement in execution, it is expected to reverse from its current levels and start moving upwards soon. This is due to the positives like the content wins with Apple (AAPL) as well as the prospects for revenue growth from mobile from Chinese handset makers. In addition, wireless infrastructure has also started making a bullish move. Furthermore, the recent news about the penetration of Intel chips in Apple iPhone 7 is also positive for QRVO.

Meanwhile, an acquisition rumor about QRVO is currently making rounds in social media chatter. Although there is no concrete confirmation, since the stock had spiked for past two days with no apparent reason, many are awaiting the fire to follow the current trail of smoke. The company had recently announced the authorization of share repurchases worth $500 million, expanding on the company’s prior program that was supposed to expire last day.

According to data compiled by TipRanks.com, Qorvo has an overall consensus rating of Moderate Buy based on recent ratings by analysts covering the stock. The average analyst price target is $63.57 which is an upside of 24.45% from the current levels.