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Qorvo Announces Closing of Additional Senior Notes Offering

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Qorvo, Inc. (QRVO - Free Report) concluded the previously announced private offering of $130 million principal amount of 5.50% Senior Notes due 2026. These additional notes once placed will be an unsecured senior liability of Qorvo. Notably, interest for these additional notes will be paid semi-annually.

The notes have been offered to qualified institutional buyers under Rule 144A, which is exempted from registration requirements under the United States Securities Act of 1933. Qorvo intends to utilize the proceeds of additional notes to fund a tender offer for its 7% senior notes due 2025. We believe these notes will provide financial flexibility to the company and fuel long-term growth.

Share Price Performance

Shares of Qorvo have returned 19.9% year to date, significantly outperforming the industry’s rally of 1.7%.

The outperformance can primarily be attributed to robust adoption of the company’s performance-tier for RF Fusion-based solutions as well as for antenna tuning, discrete components and BAW-based multiplexers.

Qorvo’s Cash Position

As of Jun 30, 2018, the company’s cash and cash equivalents were $392 million compared with $926 million in the previous quarter. Long-term debt was $558.3 million as compared with $983.3 million at the end of the previous quarter.

Net cash provided by operating activities was $75 million down from $259 million in the previous quarter. Capital expenditure came in at $44 million.

Last Words

Qorvo has an excellent earnings surprise history as the stock has surpassed the Zacks Consensus Estimate in the prior four quarters, the average positive surprise being 9.85%. We expect the company to record earnings growth of 9.5% and 8.3% in 2019 and 2020, respectively.

The company is benefiting from improved demand environment in China. Solid demand for the company’s solutions in defense (advanced radars and other electronic warfare products) and connectivity (Wi-Fi and emerging Internet-of-Things-based applications) is a tailwind. Rapid adoption of GaN for high-power applications augurs well in the long haul.

Zacks Rank & Other Stocks to Consider

Qorvo carries a Zacks Rank #2 (Buy).

Aspen Technology, Inc. (AZPN - Free Report) , Mellanox Technologies, Ltd. , and Logitech International S.A. (LOGI - Free Report) are some other top-ranked stocks in the broader technology sector. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AspenTech, Mellanox, and Logitech have a long-term earnings growth rate of 16.5%, 15% and 8%, respectively.

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