Wall Street Weighs In On Qorvo's Impressive Quarter

Qorvo Inc QRVO stock traded higher by 6 percent Wednesday after the company easily beat fiscal fourth-quarter earnings and revenue estimates. Qorvo reported revenue of $681 million, gross margin of 48.2 percent and operating income of $167 million.

Qorvo said the fourth quarter was even stronger than they had anticipated, and the company guided for fiscal first-quarter 2020 revenue of between $780 million and $800 million and EPS of $1.30.

Several analysts have weighed in on Qorvo’s earnings beat. Here’s a sampling of what they’ve had to say.

Offsetting China Weakness

Charter Equity Research analyst Edward Snyder said the benefits of Qorvo’s bulk acoustic wave (BAW) and gallium nitride (GaN) technology are really starting to impact the company’s numbers.

“A heavy concentration in the high-performance slots of premium phones in China and at Samsung allowed the company to sidestep widespread economic weakness in China,” Snyder wrote in a note.

PiperJaffray analyst Harsh Kumar said Qorvo’s infrastructure/defense and mobile businesses helped drive the company’s stronger-than-expected June quarter guidance.

“Specifically at mobile, the company is expecting to see strong traction and ramp with all three of its top customers,” Kumar wrote.

MKM Partners analyst Ruben Roy said customer diversification has helped improve Qorvo’s near-term outlook.

“We remain positive on QRVO shares given our continued expectations for broader market share gains, with higher value content, across a diverse set of mobile handset customers,” Roy wrote.

iPhone Market Share Concerns

BMO Capital Markets analyst Ambrish Srivastava said Qorvo’s June quarter guidance put rival Skyworks Solutions Inc SKWS to shame.

“Near term it would appear that Qorvo is taking share but likely best to look over more than a quarter to get a better picture of true share gains,” Srivastava wrote.

Mizuho analyst Vijay Rakesh said Qorvo reported a strong quarter, but he anticipated Broadcom Inc AVGO will gain market share in the next generation iPhones.

“We prefer AVGO with share gains, diversification and cash return,” Rakesh wrote.

KeyBanc analyst John Vinh said is is becoming increasingly obvious Qorvo has lost market share in the next generation high-end iPhones.

“While this has been partially offset by share gains at Samsung and with Chinese OEMs, including Huawei, and from the ramp of 5G with both IDP and in handsets, we are still expecting modest declines in Mobile this year, which still represents ~65% of revenues,” Vinh wrote.

Ratings And Price Targets

• Charter has a Buy rating and no target.
• Piper Jaffray has an Overweight rating and $90 target.
• BMO has a Market Perform rating and $75 target.
• Mizuho has a Neutral rating and $75 target.
• MKM has a Buy rating and $95 target.
• KeyBanc has a Sector Weight rating and no target.

The stock traded around $78.05 per share at time of publication.

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