Brean Sees Buying Opportunity In Qorvo

• Shares of Qorvo, Inc. QRVO have declined more than 39 percent in the last three months.
• Brean Capital’s Mike Burton has reiterated a Buy rating and price target of $80 on the company.
• The stock underperformed, following the announcement of the completion of the share buyback program and the conference presentation, presenting an attractive buying opportunity.

Analyst Mike Burton believes that the stock declined almost 9 percent in the week of September 7 possibly due to short term concerns regarding the consensus forecasts for the December quarter “and (ironically) the recent completion of its buyback program.”

Burton also believes that the near-term weakness presents an opportunity to accumulate the stock, given that the company’s long term story remains intact. The investor concerns regarding the consensus forecasts for the December quarter could be related to expectations of revenue growth for Qorvo versus some of its peers.

In addition, the Brean Capital report stated that investors had been complaining that with the completion of the $400 million share buyback program “the company is no longer supporting the stock.”

However, Burton has expressed optimism regarding the “$600M in share repurchases since February as a good return of cash to shareholders and considering the company’s free cash flow going forward.”

Burton also expressed optimism regarding Qorvo’s “increasing content share at Samsung,” billing it as one of Qorvo’s “biggest opportunities in 2016.”

Another issue that could be putting pressure on the stock is the concerns regarding the “filter content share in the iPhone 7.” “While some decisions about architecture have likely been made, we believe it’s much too early to call which sockets have been assigned,” the report explained.

Burton expressed confidence in Qorvo’s margin story for 2016, as the true Qorvo components, to be launched in 1H16, are expected to drive growth, cost synergies and content gains, which in turn would drive further margin expansion.