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Qorvo (QRVO) Hikes Q2 Sales View on Solid 5G Uptick, Stock Up

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Qorvo, Inc. (QRVO - Free Report) recently provided an update on second-quarter fiscal 2021 outlook.

The company now anticipates fiscal second-quarter revenues in the band of $1 billion to $1.03 billion (mid-point of $1.015 billion), up from its prior range of $925-$955 million (mid-point of $940 million) citing increased demand for 4G and 5G mobile products utilized in flagship smartphones. It reflects an improvement of almost 8% considering mid-point level.

The Zacks Consensus Estimate is currently pegged at $940.3 million.

Non-GAAP earnings per share have been predicted to be $2.14 per share, up from the previous guidance of $1.90 per share. The Zacks Consensus Estimate stands at $1.91 per share.

Following encouraging guidance revision, shares of Qorvo are up more than 6% in the pre-market on Sep 9. Moreover, Qorvo’s peers including Skyworks (SWKS - Free Report) , Lumentum (LITE - Free Report) and Qualcomm (QCOM - Free Report) are up 3.2%, 2.3% and 3.1%, respectively, in the pre-market trading.

Qorvo, Inc. Revenue (Quarterly)

Qorvo, Inc. Revenue (Quarterly)

Qorvo, Inc. revenue-quarterly | Qorvo, Inc. Quote

However, management continues to anticipate non-GAAP gross margin at 50%.

Strength in Mobile Product Portfolio: A Key Catalyst

Qorvo is benefiting from increase in production ramp of 5G smartphones. Solid uptake of Bulk Acoustic Wave (BAW) filters, as economies started to reopen, is expected to boost top line growth.

Moreover, robust mobile growth in China (primarily backed by 5G) and expanding portfolio of 5G base solutions amid accelerated deployment of 5G bodes well. Besides growing momentum for Qorvo’s Gallium Nitride (GaN) technology-based solutions is a positive.

This is expected to instill investors optimism in the stock in the days ahead. Qorvo’s stock has fallen 1.8% year to date, compared with industry’s decline of 3.6%.

Notably, Qorvo’s cellular RF and WiFi solutions find application in a variety of mobile devices, including smartphones, notebook computers, wearables, tablets, and cellular-based applications.

Being a prominent supplier to Apple, seasonal iPhone upgrades hold promise for Qorvo. Also, improving iPhone sales despite coronavirus breakout is a tailwind.

Specifically, momentum in 5G is expected to drive the company’s RF revenues in 2020 and beyond.

Further, booming WiFi-6 cycle, and increasing proliferation of IoT are expected to generate incremental revenues in the days ahead.


Positive Earnings Estimate Revision

Qorvo has an impressive earnings surprise history. The company beat estimates in each of the trailing four quarters, the average surprise being 20%.

Moreover, over the last 60 days, fiscal 2021 estimates were revised, driving the Zacks Consensus Estimate by 18.5%, to $6.60 per share.

Further, the company has a long-term expected EPS growth rate of 11.4%.

Robust adoption of the company’s solutions in defense (advanced radars and other electronic warfare products) and connectivity (Wi-Fi 6 and emerging IoT applications) is expected to bolster growth prospects.

Qorvo currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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