Qorvo Could Achieve $9.63 EPS By 2026 With Activist Involvement, Morgan Stanley Upgrades Stock

Morgan Stanley analyst Joseph Moore upgraded Qorvo, Inc. QRVO to Overweight from Equal-Weight, raising the price forecast to $106 from $90.

Moore notes that he has seen value in Qorvo stock and attempted to capture it through upgrades, but the results have been only modest.

The analyst also highlighted challenges in the radio frequency space, particularly with pressure on the Chinese business, which increases concentration in other areas.

Per Moore, while the radio frequency market served by high-performance companies like Broadcom, Skyworks Solutions, and Qorvo will continue to grow, it will remain highly concentrated, primarily driven by high-end global phones.

Also Read: Apple’s AI Advances Can’t Offset Chinese Market Slowdown, Says Analyst

With the involvement of activist Starboard, the analyst views that Qorvo has the potential for a renewed earnings recovery.

According to Moore, Qorvo can achieve $9.63 in EPS by shifting from a “growth through diversification” strategy to focusing on its core radio frequency proficiency from calendar year 2026.

The analyst sees 48.0% gross margins and 25.8% operating margins by 2026, both aligned with their pre-covid average from 2015-2019.

The analyst suggests that Qorvo could accomplish this by reducing, but not eliminating, internal fab usage to stabilize gross margins through cycles, realigning operating expenses around the core radio frequency portfolio, and leveraging its discounted multiple for cash return to accelerate EPS growth.

While there is potential for top-line growth, especially with the Apple Inc. modem transition, the analyst emphasizes that the EPS growth forecast does not depend on aggressive revenue assumptions. Given Starboard’s track record and history with Qorvo, the analyst sees a significant opportunity to unlock value through a strategic course correction.

Price Action: QRVO shares are trading higher by 5.75% to $89.05 at last check Tuesday.

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