Analysts Debate Qorvo's iPhone Share After Chipmaker's Q3 Print

Chipmaker Qorvo Inc QRVO reported third-quarter results Thursday that came in better than expected on the top- and bottom-line.

The company downwardly revised its guidance for the March-ending quarter due to lower demand for certain flagship smartphones. Here's how the Street reacted.

The Analysts

KeyBanc Capital Markets' John Vinh maintains a Sector Weight rating on Qorvo's stock with no price target.
D.A. Davidson's Thomas Diffely maintains at Neutral, price target lifted from $63 to $70.
Charter Equity Research's Edward Snyder maintains at Market Perform.

KeyBanc: The Numbers

Qorvo's earnings report came in slightly better than what the chipmaker pre-announced, with mobile revenue falling 6 percent form last year and 10 percent from last quarter to $602 million due to poor Apple Inc AAPL iPhone demand and weakness in China, Vinh said in a research report.

IDP revenue of $230 million was up 14 percent from last year and up 6 percent from the prior quarter due to strong 5G demand as the company benefited from Massive MIMO and GaN rollouts, the analyst said.

Qorvo's EPS and revenue guidance for Q4 of $1.05 and $670 million, respectively, at the midpoint were both short of expectations of $1.34 per share and $727 million, Vinh said. Looking forward to next fiscal year, Qorvo said it expects to see modest revenue growth, which implies it will maintain its mid-to-high-band PAD share in the 2019 iPhone, he said.

Qorvo will also be shutting down its Florida SAW fab and idling the Farmer's Branch BAW fab until early calendar 2020, which will likely negatively impact margins in fiscal 2020, according to KeyBanc.

DA Davidson: Long-Term Catalysts Unchanged

Qorvo suffered from a "predictable demand pause" in smartphone demand ahead of the 5G rollout, along with other headwinds like trade tension and macroeconomic concerns, Diffely said in a research report.

Despite a difficult environment, Qorvo outperformed expectations and showed design wins for high-end integrated BAW filters, which were initially developed for the iPhone, the analyst said.

Looking forward Qorvo's three drivers of long-term growth remain unchanged, Diffely said:

A big 5G phone ramp in 2020.
A Wi-Fi-6 rollout that could offer users improved coverage and speeds up to four times faster.
The continued expansion of internet of things devices across nearly every industry.

Charter: Flat Revenue In 2019

Qorvo's best-case outcome for 2019 is likely to be flat revenue growth from last year, Snyder said in a research report.

This is based on the post-earnings conference call, which the analyst said "leaves us convinced" that Skyworks Solutions Inc SWKS will supply the BAW-based DRX module on new iPhones and Broadcom Inc AVGO will supply the SuperPAD for the device.

Qorvo will likely continue holding its market share of SuperPAD in the legacy iPhone XR, but the absence of any new similar win on a low-end iPhone implies the potential for a blended market share decline in the 2019 iPhone, Snyder said. Oddly enough, Qorvo could also see its blended market share increase if Apple decides to forgo Broadcom in favor of Qorvo's lower-cost SuperPAD, which is pin-for-pin compatible, he said.

For the time being, no one "knows the answer to this riddle, not even Apple," the analyst said, adding that he expects no further clarity before September.

Huawei and Samsung represent "clear bright spots" in the near-term, but these two catalysts at best can help the company show flat revenue in fiscal 2020, according to Charter.