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Qorvo Essentially Confirms Apple Design Win; Nomura Upgrades

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Qorvo Essentially Confirms Apple Design Win; Nomura Upgrades
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Qorvo Inc (NASDAQ: QRVO), a provider of high-performance RF solutions for advanced wireless devices, defense radar and communications, is on a run of design wins, with Apple Inc. (NASDAQ: AAPL) likely the latest to source from the Greensboro, North Carolina-based company. 

The Analyst

Nomura Instinet analyst Krysten Sciacca upgraded shares of Qorvo from Neutral to Buy and increased the price target from $75 to $85.

The Thesis

Qorvo's management confirmed Nomura's belief that the company notched a design win with Apple by suggesting on the earnings call it expects to see an "aggressive" ramp of a custom mid/high-band PAD in the second half of 2018 for a marquee customer, Sciacca said in a Thursday note.

"Qorvo's design win at Apple would secure a lucrative socket that has been held by Broadcom Ltd (NASDAQ: AVGO) for the past two generations," the analyst said. This could result in $230 million to $305 million in incremental revenues for Qorvo in the second half of calendar 2018, Sciacca said. 

"Importantly, this design win would signify Qorvo becoming one of only two suppliers of an integrated mid/high-band PAD."

Nomura projects incremental upside for Qorvo from content gains in antenna tuning and envelope tracking.

The Apple win — coupled with design wins at Huawei and SAMSUNG ELECTRONIC (OTC: SSNLF) and expected gross margin —expansion could lead to a strong results in the second half of this year and in 2019, Sciacca said. 

Qorvo's fiscal third-quarter results exceeded expectations on all metrics, but the company's fiscal fourth-quarter revenue guidance trailed estimates on weaker smartphone demand, according to Nomura. 

"That said, we believe investors are instead looking to [the second half of calendar 2018] and the potential long-term implications of Qorvo's recent mid/high-band PAD design win at Apple." 

The Price Action

Qorvo shares were up about 12 percent over the past year ahead of Thursday's earnings-induced rally.

Reacting to the company's Qorvo's Q3 report Wednesday after the close, shares were soaring an incremental 13.26 percent to $81.29 at the time of publication.

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Latest Ratings for QRVO

DateFirmActionFromTo
Apr 2018UBSInitiates Coverage OnNeutral
Mar 2018InstinetDowngradesBuyNeutral
Mar 2018JP MorganMaintainsOverweightOverweight

View More Analyst Ratings for QRVO
View the Latest Analyst Ratings

Posted-In: Krysten Sciacca Nomura Instinet RF wirelessAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

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