🔥 Premium AI-powered Stock Picks from InvestingPro Now up to 50% OffCLAIM SALE

UBS maintains 'Neutral' on Qorvo stock citing ambitious financial model

EditorEmilio Ghigini
Published 06/12/2024, 05:28 AM

Wednesday, June 12, 2024, UBS has reaffirmed a Neutral stance on Qorvo Inc (NASDAQ:QRVO) stock with a consistent price target of $105.00. Qorvo, during its investor day in New York City, presented an ambitious financial model for fiscal year 2029. The plan suggests the company aims to outpace growth in its markets and shift focus from its dependence on the Apple (NASDAQ:AAPL) Component Group (ACG).

The company expressed a more optimistic outlook on its growth prospects with Apple and emphasized its substantial investments aimed at expanding its integrated module offerings. Qorvo also mentioned existing agreements that indicate potential share gains with Apple could be sustainable.

In the High-Performance Analog (HPA) sector, Qorvo benefits from strong connections with the U.S. Department of Defense and is witnessing considerable upgrade activities for Advanced Electronically Scanned Array (AESA) radar systems, as well as growing opportunities in Low Earth Orbit (LEO) satellite networks.

Qorvo’s strategy includes leveraging its touch sensing and power management portfolio to deepen customer relationships across various industries such as aerospace, defense, industrial, and automotive. The company's projections indicate an earnings per share (EPS) of over $20 by the end of FY29, a significant increase from approximately $6.20 in FY24.

Despite these prospects, UBS has chosen to maintain its current model, requiring further evidence before considering any adjustments. The firm's decision to uphold the $105 price target and Neutral rating reflects a wait-and-see approach to Qorvo's ambitious long-term financial goals.

In other recent news, Qorvo Inc has been a focal point in several analyst notes. Wolfe Research maintained an Outperform rating on the company, following Qorvo's Investor Day where the firm outlined its long-term financial model.

The company aims to achieve a long-term revenue compound annual growth rate (CAGR) exceeding 10% and gross margins over 50%. Qorvo also plans to increase the proportion of its non-handset business to over 50% of its total revenue over time.

In contrast, Benchmark reduced Qorvo's share target to $128 due to a mixed outlook, despite maintaining a buy rating. For the March quarter, Qorvo reported revenues of $941 million, exceeding consensus estimates by $14 million. However, the company's projections for the June quarter are less optimistic, with estimated revenues of approximately $850 million.

Qorvo recently reported solid Q4 results and strategic expansions, including the acquisition of Anokiwave, which strengthened its defense and aerospace capabilities. The company expects modest growth in revenue and gross margin for fiscal year 2025. These recent developments reflect the ongoing changes in the company's strategy and performance.

InvestingPro Insights

As Qorvo Inc (NASDAQ:QRVO) lays out its financial roadmap for the coming years, current metrics and analyst insights from InvestingPro provide a nuanced picture of the company's situation. With a market capitalization of $9.95 billion, Qorvo's valuation is under scrutiny, especially considering its negative P/E ratio of -144.11. However, looking ahead, the adjusted P/E ratio for the last twelve months as of Q4 2024 stands at a more favorable 48.32, suggesting that analysts are expecting an earnings turnaround.

InvestingPro Tips indicate that management's confidence in Qorvo's future is evidenced by their aggressive share buyback strategy, and despite a recent history of non-profitability, there is a clear expectation for net income growth this year. Liquid assets surpassing short-term obligations also provide a buffer for the company's ambitious expansion plans. Notably, while Qorvo does not offer dividends, its potential for profitability this year could be a sign of changing tides for investors.

For readers interested in a deeper dive, there are additional InvestingPro Tips available that could further inform investment decisions regarding Qorvo. By using the coupon code PRONEWS24, investors can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking valuable insights that could be critical in evaluating Qorvo's ambitious targets for FY29.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.