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Greensboro, North Carolina-based Qorvo, Inc. (QRVO) develops and commercializes technologies and products for wireless, wired, and power markets. Valued at $6.2 billion by market cap, the company combines product and technology leadership, systems-level expertise and manufacturing scale to connect, protect and power the world.
Shares of this radio frequency chips leader have significantly underperformed the broader market over the past year. QRVO has declined 29.5% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 30.6%. In 2024, QRVO stock is down 41.1%, compared to the SPX’s 23.6% rise on a YTD basis.
Narrowing the focus, QRVO’s underperformance is apparent compared to the SPDR S&P Semiconductor ETF (XSD). The exchange-traded fund has gained about 15.4% over the past year. Moreover, the ETF’s 1.7% gains on a YTD basis outshine the stock’s double-digit losses over the same time frame.
QRVO's underperformance has been primarily caused by intense competition and weak demand for smartphones. The company is facing challenges as more consumers are choosing lower-priced 5G smartphones over mid-range options, resulting in lower profit margins. Unfortunately, Qorvo anticipates that this trend will continue in the near future.
On Oct. 29, QRVO reported its Q2 results and its shares closed down more than 27% in the following trading session. Its adjusted EPS of $1.88 exceeded Wall Street expectations of $1.85. The company’s revenue was $1.1 billion, surpassing Wall Street forecasts of $1 billion. For Q3, QRVO expects its adjusted EPS to be between $1.10 and $1.30, and expects revenue in the range of $875 million to $925 million.
For the current fiscal year, ending in March 2025, analysts expect QRVO’s EPS to decline 32.3% to $3.37 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 23 analysts covering QRVO stock, the consensus is a “Hold.” That’s based on two “Strong Buy” ratings, one “Moderate Buy,” 17 “Holds,” one “Moderate Sell,” and two “Strong Sells.”
This configuration is less bullish than a month ago, with three analysts suggesting a “Strong Buy,” and two recommending a “Moderate Buy.”
On Nov. 12, Loop Capital initiated a “Hold” rating on QRVO with a $73 price target, implying a potential upside of 10.1% from current levels.
The mean price target of $93.31 represents a 40.7% premium to QRVO’s current price levels. The Street-high price target of $156 suggests an ambitious upside potential of 135.2%.
