Citi Upgrades Qorvo On Improved Execution

Citi has upgraded Qorvo Inc QRVO to Neutral from Sell on "improved execution in integration/share gains and higher proliferation of carrier aggregation design wins."

"We believe QRVO can sustain the $ content gain momentum in GS7 and iPhone SE gained this year," analyst Atif Malik wrote in a note.

Why The Upgrade?

Malik said Qorvo is better positioned to expand its monetary growth opportunity "based on its comprehensive suite of products including BAW filters. Specifically, the analyst believes the company has won multiple multiplexers designs wins on B1/B3, B25/B66, and multiband PADs for CA uplinks."

"Based on our discussion with two of QRVO's competitors, we believe QRVO has turned a corner in execution with last year qtrly misses now in rear view mirror. We believe RFMD + TQNT integration issues are fully behind," the analyst highlighted.

Related Link: BMO Prefers Qorvo Over Skyworks Solutions

Shares of Qorvo are up 10 percent year-to-date after gaining share in SAMSUNG ELECTRONIC KRW5000 SSNLF. Likewise, the company saw similar monetary content in iPhone SE, which sells better than the iPhone 6s. As a result, Qorvo was able to minimize the weakness in the March quarter to -2 percent qarter-over-quarter versus Skyworks Solutions Inc SWKS's -16 percent and similar significant declines from others in the handset supply chain.

Company Guide And Analyst Expectations

Additionally, Qorvo is expecting 7 percent growth in the June quarter versus Skyworks'-3 percent due to continued design wins and strength in Samsung.

"We expect that QRVO will continue to outperform relative to SWKS, although we believe that a majority of the upsidefrom share gains is already baked into the stock," the analyst added.

The analyst increased his FY17 EPS view by $0.30 to $4.84 (Street: $4.89) due to 4 percent higher revenue and FY18E EPS estimate by $0.51 to $5.08 (Street:$5.61) due to 7 percent higher revenue.

The analyst also raised price target on the stock to $57 from $40, while shares of Qorvo closed Wednesday's regular trading at $56.04.