Shares of Qorvo (QRVO - Free Report) climbed 7.5% on Sep 9 to end the day at $122.71, following an encouraging update on second-quarter fiscal 2021 outlook.
Notably, Qorvo’s peers including Skyworks Solutions (SWKS - Free Report) and QUALCOMM Incorporated (QCOM - Free Report) gained 5.2% and 3.9%, respectively, in the intraday trading session on Sep 9.
Qorvo now anticipates fiscal second-quarter revenues between $1 billion and $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 has been predicted to be $2.14 per share, up 12.6% from the previous guidance of $1.90 per share. The Zacks Consensus Estimate currently stands at $1.98 per share, having been revised 3.7% upward in the past seven days.
Markedly, during the fiscal first quarter, the company witnessed robust traction for its 5G solutions. These offerings are highly integrated and high-performance solutions, which enable customers to reduce product footprint and accelerate products to market. Additionally, Qorvo’s mid-high-band and ultra-high-band 5G solutions are being adopted by all leading 5G chipsets.
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 drive the top line.
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 in Qorvo’s Gallium Nitride (GaN) technology-based solutions is a positive.
Being a prominent supplier to Apple (AAPL - Free Report) , seasonal iPhone upgrades hold promise for Qorvo. Also, improving iPhone sales despite coronavirus breakout is a tailwind. Specifically, 5G is expected to drive the company’s RF revenues in 2020 and beyond.
Notably, the Zacks Consensus Estimate for fiscal 2021 earnings has been revised upward by 20.5% to $6.71 per share over the last 60 days. Qorvo currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Qorvo’s Revised Guidance: A Testament to 5G Boom
Qorvo’s raised view for the fiscal second quarter highlights that the technology ecosystem is close to realizing the benefits from impending 5G boom. Markedly, per Ericsson’s Mobile subscriptions outlook, 5G subscriptions are projected to hit 2.8 billion by 2025, representing 30% of total mobile subscriptions.
5G is expected to unlock the full potential of emerging technologies such as IoT, AI, AR/VR, among others. The linchpin technology is the building block of increasing proliferation of smart connected homes, hospitals, factories and cities, and self-driving vehicles.
5G boasts lightning speed that facilitates seamless transfer of data. This has gained immense significance amid the coronavirus outbreak. Rapid proliferation of remote working, learning and health diagnosis amid lockdowns and shelter-in-place guidelines to curb the spread of the COVID-19 virus has highlighted the limitations of 4G networks and the urgent need to switch to 5G networks.
These factors are driving demand for 5G chipsets. Microchip demand is also likely to get a boost from the 5G boom in Europe and parts of Asia, including China and Singapore. Grand View Research estimates the 5G chipset market to grow at a CAGR of 63.4% between 2020 and 2027.
Moreover, growing demand for e-commerce, contactless delivery through drones and digital payment highlight the urgency for 5G network development. As such, the 5G infrastructure market is estimated to rise from $784 million in 2019 to $47.78 billion by 2027 at a CAGR of 67.1%, per a MarketsandMarkets report.
4 Other Best 5G Bets
Here we pick four other stocks that are well-poised to benefit from solid growth in 5G infrastructure spending and proliferation. All the four stocks currently carry a Zacks Rank #2.
Year-to-Date Price Performance
QUALCOMM, one of the largest manufacturers of wireless chipset based on baseband technology, is poised to gain from strong momentum in the launch of new 5G flagship handsets.
The company set a new benchmark for itself as it unveiled a game-changing 5G chipset for low-cost smartphones for the masses. The Snapdragon 690 5G chipset is the first SoC (System-on-Chip) in the 600 series to support 5G services at accessible price points. This is likely to usher in more affordable 5G Android mobile handsets.
With more than 150 5G design wins, Qualcomm is reportedly the only chipset vendor with 5G system level solutions spanning both sub-6, gigahertz and millimeter wave bands. For calendar year 2020, the company continues to expect 175-225 million 5G handset unit shipments.
The Zacks Consensus Estimate for fiscal 2020 earnings has been revised upward by 7.1% in the past 60 days to $3.91 per share.
Keysight Technologies (KEYS - Free Report) is gaining from strong presence in the 5G network emulation market. Collaborations with Qualcomm, Xilinx and AT&T, and notable acquisitions including Ixia, Anite and AT4 Wireless have enhanced Keysight’s 5G solutions portfolio.
Keysight’s better-than-expected fiscal third-quarter results and impressive guidance for fiscal fourth quarter reflect momentum in 5G test solutions and strong backlog. Improving supply chain management, uptick in 5G test solutions on accelerated 5G deployment, and demand recovery across Asia boosts the company’s business prospects.
Notably, the Zacks Consensus Estimate for fiscal 2020 earnings has been revised upward by 10.5% in the past 60 days to $4.63 per share.
Taiwan Semiconductor Manufacturing Company Ltd. (TSM - Free Report) , the world's largest dedicated integrated circuit foundry, is well poised to capitalize on 5G boom on strength in its robust 7-nanometer (nm) and 5 nm production processes.
Momentum in new 5G smartphone launches, compelled the company to raise outlook for 5G smartphone penetration rate to high teens in 2020. The company anticipates solid uptick in 5G and high performance computing (HPC) related applications to bolster semiconductor content enrichment through 2020.
The consensus mark for 2020 earnings has been revised upward by 12.1% to $3.14 per share in the past 60 days.
Analog Devices (ADI - Free Report) derives its strength in communication market via rising adoption of advanced radio systems in 5G infrastructures. It remains optimistic about growth opportunities related to 5G.
Analog Devices’ full signal-chain solutions aid 5G operators to reduce time to market with focus on end-product performance and by eliminating complexity in supply chain in a cost-efficient manner. The company helps customers design the radio architectures and deploy 5G system with high performance and low power functionalities.
The consensus mark for fiscal 2020 earnings has been revised upward by 11.9% to $4.79 per share over the past 60 days.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>