Qorvo Inc QRVO, a provider of high-performance RF solutions for advanced wireless devices, defense radar and communications, is on a run of design wins, with Apple Inc. AAPL likely the latest to source from the Greensboro, North Carolina-based company.
The Analyst
Nomura Instinet analyst Krysten Sciacca upgraded shares of Qorvo from Neutral to Buy and increased the price target from $75 to $85.
The Thesis
Qorvo's management confirmed Nomura's belief that the company notched a design win with Apple by suggesting on the earnings call it expects to see an "aggressive" ramp of a custom mid/high-band PAD in the second half of 2018 for a marquee customer, Sciacca said in a Thursday note.
"Qorvo's design win at Apple would secure a lucrative socket that has been held by Broadcom Ltd AVGO for the past two generations," the analyst said. This could result in $230 million to $305 million in incremental revenues for Qorvo in the second half of calendar 2018, Sciacca said.
"Importantly, this design win would signify Qorvo becoming one of only two suppliers of an integrated mid/high-band PAD."
Nomura projects incremental upside for Qorvo from content gains in antenna tuning and envelope tracking.
The Apple win — coupled with design wins at Huawei and SAMSUNG ELECTRONIC SSNLF and expected gross margin —expansion could lead to a strong results in the second half of this year and in 2019, Sciacca said.
Qorvo's fiscal third-quarter results exceeded expectations on all metrics, but the company's fiscal fourth-quarter revenue guidance trailed estimates on weaker smartphone demand, according to Nomura.
"That said, we believe investors are instead looking to [the second half of calendar 2018] and the potential long-term implications of Qorvo's recent mid/high-band PAD design win at Apple."
The Price Action
Qorvo shares were up about 12 percent over the past year ahead of Thursday's earnings-induced rally.
Reacting to the company's Qorvo's Q3 report Wednesday after the close, shares were soaring an incremental 13.26 percent to $81.29 at the time of publication.
Related Links:
Rosenblatt Says Qualcomm RF efforts Could Become Headwind For Skyworks, Qorvo
Oppenheimer Lowers Apple Supplier Estimates On Weak iPhone Projections
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
|---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
