We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Weak Growth in China Hurt Qorvo's (QRVO) Q4 Earnings?
Read MoreHide Full Article
Qorvo Inc (QRVO - Free Report) is set to release fourth-quarter fiscal 2018 earnings on May 2.
Notably, the company beat the Zacks Consensus Estimate in the trailing four quarters with an average positive surprise of 5.57%. The company delivered a positive surprise of 5.63% in last reported quarter.
Revenues on a non-GAAP basis increased 2.4% year over year to $844.8 million, reflecting an improved demand environment in China. The company benefited from increasing dollar content across power amplifiers, switches, tuners and Wi-Fi in flagship smartphones from Huawei, Oppo, Vivo and others.
For fourth-quarter of fiscal 2018, Qorvo expects non-GAAP revenues between $645 million and $665 million. Earnings are anticipated to be $1.05 at the mid-point of the company’s target range.
The Zacks Consensus Estimate for earnings and revenues is currently pegged at $1.05 and $656.6 million, respectively.
Notably, the stock has returned 1.2% year to date, as compared with the 9.4% loss of the industry.
Let’s see how things are shaping up for this announcement.
Mobile Product revenues to Disappoint
Qorvo stated that delayed product cycle at its largest customer (Apple) and also in China is likely to hurt Mobile Product (“MP”) revenues in the soon-to-be-reported quarter.
Apple has slashed its production target by half from almost 40 million projected during the iPhone X release, per Nikkei, due to sluggish demand.
Goldman Sachs’ latest prediction on iPhone sales has put further shadow on growth prospects of Apple’s component suppliers. The investment firm, in its Mar 27 note, announced trimming iPhone sales expectations by a whopping 1.7 million units to 53 million, for the March quarter.
The production cut is likely to hurt Qorvo’s top-line in the quarter.
Moreover, China accounts for almost 30% of Qorvo’s MP segment revenues. Per market research firm GFK, smartphone demand in China decreased 6% in first-quarter 2018, while average selling price (ASP) increased year over year.
Although the improving price environment bodes well for Qorvo’s top-line growth, lower shipments due to sluggish demand are a concern. GFK forecasts smartphone demand in China to decline by 4% in 2018 as the market becomes more saturated.
The Zacks Consensus Estimate for MP segment is currently pegged at $453 million.
Infrastructure and Defense (IDP): Key Catalyst
Qorvo’s IDP segment is benefiting from strong demand for its solutions that are used in the Internet of Things (IoT) and 5G end-markets. Notably, Smart Home revenues in the last-reported quarter surged 30% year over year.
Qorvo is the only company to support Thread, ZigBee 3.0, ZigBee RF4CE and ZigBee Green Power in a single radio. The company’s top-line is likely to gain from the launch of its multi-stack, multi-protocol chip with the HUMAX Chorus Voice Assistant. This will help it advance in the IoT and enable integration of voice assistants in a smart home system.
Moreover, IDP is anticipated to benefit from increasing adoption of its solutions in electronic warfare and missile defense. The company’s GaN products and the Spatium high-power amplifier family continues to gain good traction, which bodes well for top-line growth.
The Zacks Consensus Estimate for IDP is currently pegged at $203 million.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Qorvo’s combination of a Zacks Rank #4 with an Earnings ESP of +0.52%, makes surprise prediction difficult.
Stocks to Consider
Here are some better-ranked stocks that you may want to consider as our model shows that they have the right combination of elements to deliver an earnings beat in their upcoming release.
Arrow Electronics (ARW - Free Report) has an Earnings ESP of +0.66% and a Zacks Rank of 2.
FireEye has an Earnings ESP of +6.67% and a Zacks Rank of 3.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Will Weak Growth in China Hurt Qorvo's (QRVO) Q4 Earnings?
Qorvo Inc (QRVO - Free Report) is set to release fourth-quarter fiscal 2018 earnings on May 2.
Notably, the company beat the Zacks Consensus Estimate in the trailing four quarters with an average positive surprise of 5.57%. The company delivered a positive surprise of 5.63% in last reported quarter.
Revenues on a non-GAAP basis increased 2.4% year over year to $844.8 million, reflecting an improved demand environment in China. The company benefited from increasing dollar content across power amplifiers, switches, tuners and Wi-Fi in flagship smartphones from Huawei, Oppo, Vivo and others.
For fourth-quarter of fiscal 2018, Qorvo expects non-GAAP revenues between $645 million and $665 million. Earnings are anticipated to be $1.05 at the mid-point of the company’s target range.
Qorvo, Inc. Price and EPS Surprise
Qorvo, Inc. Price and EPS Surprise | Qorvo, Inc. Quote
The Zacks Consensus Estimate for earnings and revenues is currently pegged at $1.05 and $656.6 million, respectively.
Notably, the stock has returned 1.2% year to date, as compared with the 9.4% loss of the industry.
Let’s see how things are shaping up for this announcement.
Mobile Product revenues to Disappoint
Qorvo stated that delayed product cycle at its largest customer (Apple) and also in China is likely to hurt Mobile Product (“MP”) revenues in the soon-to-be-reported quarter.
Apple has slashed its production target by half from almost 40 million projected during the iPhone X release, per Nikkei, due to sluggish demand.
Goldman Sachs’ latest prediction on iPhone sales has put further shadow on growth prospects of Apple’s component suppliers. The investment firm, in its Mar 27 note, announced trimming iPhone sales expectations by a whopping 1.7 million units to 53 million, for the March quarter.
The production cut is likely to hurt Qorvo’s top-line in the quarter.
Moreover, China accounts for almost 30% of Qorvo’s MP segment revenues. Per market research firm GFK, smartphone demand in China decreased 6% in first-quarter 2018, while average selling price (ASP) increased year over year.
Although the improving price environment bodes well for Qorvo’s top-line growth, lower shipments due to sluggish demand are a concern. GFK forecasts smartphone demand in China to decline by 4% in 2018 as the market becomes more saturated.
The Zacks Consensus Estimate for MP segment is currently pegged at $453 million.
Infrastructure and Defense (IDP): Key Catalyst
Qorvo’s IDP segment is benefiting from strong demand for its solutions that are used in the Internet of Things (IoT) and 5G end-markets. Notably, Smart Home revenues in the last-reported quarter surged 30% year over year.
Qorvo is the only company to support Thread, ZigBee 3.0, ZigBee RF4CE and ZigBee Green Power in a single radio. The company’s top-line is likely to gain from the launch of its multi-stack, multi-protocol chip with the HUMAX Chorus Voice Assistant. This will help it advance in the IoT and enable integration of voice assistants in a smart home system.
Moreover, IDP is anticipated to benefit from increasing adoption of its solutions in electronic warfare and missile defense. The company’s GaN products and the Spatium high-power amplifier family continues to gain good traction, which bodes well for top-line growth.
The Zacks Consensus Estimate for IDP is currently pegged at $203 million.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Qorvo’s combination of a Zacks Rank #4 with an Earnings ESP of +0.52%, makes surprise prediction difficult.
Stocks to Consider
Here are some better-ranked stocks that you may want to consider as our model shows that they have the right combination of elements to deliver an earnings beat in their upcoming release.
Fortinet (FTNT - Free Report) has an Earnings ESP of +2.70% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arrow Electronics (ARW - Free Report) has an Earnings ESP of +0.66% and a Zacks Rank of 2.
FireEye has an Earnings ESP of +6.67% and a Zacks Rank of 3.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>