By Senad Karaahmetovic
Shares of Qorvo (NASDAQ:QRVO) are down about 4% in premarket Thursday after the chipmaker lowered guidance for the second quarter.
For its first quarter, Qorvo reported an adjusted EPS of $2.25 on revenue of $1.04 billion to beat analyst expectations of $2.11 on sales of $1.02 billion. Qorvo reported an adjusted gross margin and adjusted operating margin of 50% and 27.5%, respectively.
For this quarter, the company sees an adjusted EPS of $2.45 to $2.65 with the midpoint of the guidance coming in below the consensus of $2.61. Revenues are seen between $1.12 billion and $1.15 billion, somewhere in line with the consensus of $1.14 billion.
A Piper Sandler analyst blamed the move lower in after-hours trading on the revised Q2 EPS guidance. The analyst slashed the price target to $115 from $115 but remains Overweight-rated on Qorvo stock as near-term headwinds are “temporary setbacks.”
“The company is actively trying to reduce inventory in the mobile channel, particularly for China-based Android phones. As a result, Qorvo is facing a reduction in its sales forecast and lower utilization at its factories. This will lead to a substantial drop in gross margins for both the December 2022 and March 2023 quarters,” the analyst said in a client note, before adding:
“Management expects the inventory adjustment to last at least through the December 2022 quarter, potentially spilling into the March 2023 quarter. We feel Qorvo’s actions are prompt but ultimately will impact near-term estimates. As we look to fiscal 2024, we see the company going back to a regular level of shipping, therefore increasing both revenue and margins.”
A JPMorgan analyst also remains positive on Qorvo despite cutting the price target to $125 from $140.
“QRVO is down ~32% YTD and has underperformed its peers by ~1000 bpts, and in light of our ~20% CY23 EPS cut relative to consensus, we think QRVO’s reward/risk profile is attractive at current levels,” the analyst told clients in a note.