On Wednesday, Piper Sandler adjusted its stance on Qorvo Inc (NASDAQ: NASDAQ:QRVO), reducing the price target to $85 from the previous $100, while keeping a Neutral rating on the stock. The adjustment follows Qorvo's reported earnings for the September quarter, which surpassed expectations, but was paired with a December quarter guidance that fell short of estimates.
In a statement following the earnings report, Qorvo's management highlighted a shift in the Android market, with a growing preference for entry-level devices over mid-tier smartphones. The company did not provide specific forecasts for future handset unit volumes. However, they anticipate year-over-year revenue declines in the low single digits for the current fiscal year.
The firm also declared that Qorvo would not engage in price competition with discrete offerings at the lower end of the market. This strategic choice is likely to impact the company's positioning in the value chain. In terms of costs, the gross margin is expected to end the year in the mid-40% range.
The analyst concluded by reiterating a Neutral stance, stating, "Overall, we remain on the sidelines given our outlook for broader handset units. Reiterate Neutral. PT to $85." This reflects Piper Sandler's cautious approach towards Qorvo's stock amid the current market dynamics.
In other recent news, Qorvo Inc. reported better-than-expected fiscal second quarter results, with adjusted earnings per share of $1.88 and revenue of $1.05 billion. Despite this, the company's outlook for the current quarter fell short of expectations, forecasting third quarter revenue of approximately $900 million and adjusted earnings per share between $1.10 and $1.30.
Goldman Sachs, Barclays, and Raymond James have all adjusted their outlooks on Qorvo, citing concerns over the company's near-term prospects due to changes in the smartphone market. Goldman Sachs reduced its price target to $99 from $118, while Barclays cut its target by 25% to $90.
Raymond James downgraded the stock from Outperform to Market Perform. Amid these developments, Qorvo is implementing measures including factory consolidation and operating expense reductions. The company now expects full-year fiscal 2025 revenue and gross margin to be slightly down compared to fiscal 2024.
InvestingPro Insights
Qorvo's recent financial performance and market positioning align with several key insights from InvestingPro. Despite the challenges highlighted in the article, InvestingPro Tips suggest that Qorvo's management has been aggressively buying back shares, which could indicate confidence in the company's long-term prospects. Additionally, analysts predict that the company will be profitable this year, potentially offsetting the current lack of profitability over the last twelve months.
From a financial standpoint, InvestingPro data shows that Qorvo's revenue for the last twelve months as of Q1 2023 stood at $4,005.01 million, with a robust revenue growth of 25.74% over the same period. The company's price-to-book ratio of 2.73 suggests that the stock may be reasonably valued relative to its book value, which could be of interest to value-oriented investors.
These insights provide additional context to Piper Sandler's analysis and could be valuable for investors considering Qorvo's stock. For those seeking a more comprehensive analysis, InvestingPro offers 6 additional tips for Qorvo, providing a deeper understanding of the company's financial health and market position.
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