Qorvo May Trade At Discount Pending Diversification From Apple, Analyst Says While Downgrading Stock

Qorvo May Trade At Discount Pending Diversification From Apple, Analyst Says While Downgrading Stock
  • Wells Fargo analyst Gary Mobley downgraded Qorvo, Inc QRVO from Overweight to Equal-Weight and an $85 price target.
  • To accompany his September quarter EPS preview note, he re-rated. 
  • However, he did not revise his below-consensus FY24 and FY25 (although we saw a risk to consensus estimates). 
  • His lower price target factored in lower peer group multiples and the assumption that QRVO may trade at a discount to the broader chip sectors until the company can diversify the business away from Apple Inc AAPL and the mobile phone market. 
  • His price target assumed QRVO shares traded at only 17.0x our NTM EPS estimate (versus SOX, SWKS & QCOM at 17.0x, 10.0x & 12.0x, respectively). 
  • The discount relative to the rest of the chip sector may be a permanent fixture in the valuation consideration for QRVO, given the company’s high exposure to smartphones and Apple. 
  • Price Action: QRVO shares traded lower by 2.92% at $79.57 on the last check Tuesday.

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