3 Analysts Dissect Qorvo Earnings Beat, Predict Margins 'Are Likely To Contract'

Shares of Qorvo Inc QRVO rose in early trading on Thursday, after the company reported better-than-expected third-quarter results.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the release.

• Needham analyst Quinn Bolton maintained a Buy rating and price target of $125.
• KeyBanc analyst John Vinh reiterated a Sector Weight rating on the stock.
• Oppenheimer analyst Rick Schafer reaffirmed a Perform rating on the stock.

Check out other analyst stock ratings.

Needham: Qorvo reported strong results for its fiscal third quarter, which were “once again driven by content gains at its largest customers and management seems confident in further growing its share at its largest customer over the next two years,” Bolton said in a note.

“Android should grow again in F4Q24 (March) as end demand is picking up,” the analyst wrote. He added, however, that Qorvo’s margins are likely to contract in the fiscal fourth quarter, “as higher cost inventories built during periods of low utilization flow through the income statement.”

KeyBanc: Qorvo’s third-quarter results and fourth-quarter guidance exceeded expectations, Vinh said. “Upside in the quarter was driven by stronger than expected demand from China Android OEMs, noting channel inventories normalized in the quarter,” he added.

“Additionally, QRVO is benefiting from meaningful content gains in the Samsung GS24, highlighting its footprint represents the majority of the RF FE,” the analyst further stated.

Oppenheimer: Although Qorvo reported sales and earnings for its fiscal third quarter ahead of the consensus estimates, its results were “mixed,” Schafer said in a note. The company’s gross margins declined by 38 basis points to 43.8% due to underutilization, with WiFi as the major drag, he added.

While fourth-quarter sales and earnings outlook were in-line with expectations, Qorvo guided to gross margins “180bps lower as high-cost inventory works through the model,” the analyst further stated.

QRVO Price Action: Shares of Qorvo had risen by 5.23% to $104.96 at the time of publication on Thursday.

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