On Thursday, Benchmark analyst Cody Acree revised the price target for Qorvo Inc (NASDAQ:QRVO), a leading provider of core technologies and RF solutions for mobile, infrastructure, and aerospace/defense applications. The target has been adjusted to $128 from the previous $136, but the firm maintains a Buy rating on the shares.
Qorvo's performance in the March quarter surpassed expectations, buoyed by increased activity from Samsung (KS:005930), the company's second-largest customer, following the successful launch of the Galaxy S24 series.
Additionally, Qorvo experienced a resurgence in its High-Performance Analog (HPA) business and saw robust sequential growth in its Defense and Aerospace sector. The company reported revenues of $941 million, exceeding consensus estimates by $14 million, with a gross margin of 42.5% and earnings per share (EPS) of $1.39, which was $0.18 higher than anticipated by analysts.
For the June quarter, however, Qorvo has projected revenues of approximately $850 million, which is significantly lower than the consensus estimate of $924 million. The anticipated decrease in sales and a contracting gross margin have led to a forecasted EPS of $0.60 to $0.80, with a midpoint of $0.70—falling short of the consensus expectation of $1.27 by $0.57.
The expected downturn in the June quarter is attributed to the cyclical nature of new product launches by Qorvo's two largest smartphone clients within its Advanced Cellular Group (ACG), as well as the seasonal timing of large-scale Defense & Aerospace programs in the HPA business unit. Despite the anticipated decline, there are no current signs of excess inventory in the ACG segment, particularly within the Android market, suggesting that inventories remain relatively clear.
InvestingPro Insights
Qorvo Inc's recent performance and projections reveal a mixed financial landscape. According to InvestingPro data, the company's market capitalization stands at $10.8 billion, with a notable revenue growth of 5.61% over the last twelve months as of Q4 2024. This growth is further accentuated by a staggering quarterly revenue increase of 48.73% in Q4 2024. Despite these positive indicators, the company's P/E ratio is deeply negative at -53.48, suggesting that investors may be concerned about profitability. However, two key InvestingPro Tips highlight that net income is expected to grow this year and that the company operates with a moderate level of debt, providing a silver lining for potential investors.
Further, Qorvo's share price has experienced a large uptick over the last six months, with a 30.9% price total return, reflecting investor optimism. This optimism may be bolstered by management's aggressive share buybacks, as noted in one of the InvestingPro Tips. Additionally, the company's liquid assets exceed short-term obligations, which could signal financial stability. For readers looking to delve deeper into Qorvo's financial health and future prospects, InvestingPro offers a total of 10 additional tips. Utilizing the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription to access these valuable insights.
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