Qorvo's Strategic Wins with Apple and China's Android Stability - Still Analysts Lower Price Targets After Q2

Raymond James analyst Srini Pajjuri maintained Qorvo Inc QRVO with an Outperform and lowered the price target from $125 to $105.

QRVO reported a solid upside to the September quarter, and its December quarter outlook was also better. 

Margins are recovering (despite some lumpiness), and the analyst expects FCF to improve meaningfully in the coming quarters. 

While commentary implies that March quarter revenue is tracking below consensus, the analyst attributes it mainly to cyclical factors and conservatism. 

QRVO is benefiting from significant content gains in iPhone 15 (likely up 40-50% Y/Y), and management sounded optimistic about additional content opportunities at Apple Inc AAPL in the extended term. 

China's Android market is stabilizing after a multi-quarter inventory correction, and the company appears to be faring well at Samsung and Alphabet Inc GOOGL Google. 

Non-smartphone businesses are recovering from cyclical lows, which should continue into CY24. Pajjuri raised the estimates, and the price target cut reflects recent multiple contractions in the sector.

KeyBanc analyst John Vinh maintained a Hold rating on Qorvo.

The analyst is encouraged by these results and fine-tuned his estimates. 

The analyst projects Q3 revenue and EPS of $1.01 billion (prior $1.03 billion) vs. consensus $989.69 million and $1.68 (prior $1.79) vs. consensus $1.61.

Needham analyst N. Quinn Bolton reiterated a Buy with a price target of $125.

While the analyst remains skeptical about gross margins reaching 50% in FY25, expects channel inventory to normalize by then and provide a tailwind.

The analyst projects Q3 revenue and EPS of $1.00 billion (prior $975 million) and $1.65 (prior $1.54).

Piper Sandler analyst Harsh V. Kumar reiterated an Overweight with a price target of $120.

Overall, Kumar continues to like the content gains around QRVO and sees impacts on gross margins abating in FY25.

The analyst projects Q3 revenue and EPS of $1.01 billion and $1.65.

Oppenheimer analyst Rick Schafer reiterated a Perform rating.

The analyst sees QRVO as structurally challenged by 70% exposure to the ex-growth handset market. 

Susquehanna analyst Christopher Rolland had a Neutral rating and a price target of $95.

The analyst projects Q3 revenue and EPS of $1.00 billion and $1.65.

Price Action: QRVO shares traded lower by 2.56% at $85.57 on the last check Thursday.