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Will Revenue Contraction Affect Qorvo's (QRVO) Q3 Earnings?

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Qorvo, Inc. (QRVO - Free Report) is scheduled to report third-quarter fiscal 2023 results on Feb 1, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 4.31%. It pulled off a trailing four-quarter earnings surprise of 6.23%, on average. The company is likely to have recorded lower revenues year over year as it continues to navigate through adverse macroeconomic and geopolitical conditions.

Factors at Play

In the to-be-reported quarter, Qorvo inked a multi-year supply agreement with SK Siltron for silicon carbide (SiC) bare and epitaxial wafers to ease the domestic semiconductor supply chain situation. The SiC devices are better than conventional silicon in dealing with high power and heat conduction.

Qorvo’s Gen 4 SiC FET solutions will increase the driving range of electric vehicles by up to 10%, enabling a more efficient transfer of electricity from the battery to the motor. This is likely to have improved the revenues for the quarter.

During the third quarter, Qorvo, in collaboration with MediaTek, announced that it has secured multiple design wins that include 5G devices, Wi-Fi routers and automotive platforms. This deal will further strengthen its broad and robust portfolio and will likely boost  the commercial expansion in mobile, networking, automotive and other markets. Qorvo has already established itself as a highly regarded supplier for numerous MediaTek cellular and Wi-Fi reference designs.

The company's broad range of RF Frontend products combined with MediaTek SoCs and chipsets will boost performance and effectiveness for Wi-Fi reference designs. With regard to smartphones, it also secured several design wins with leading OEMs that span a variety of its highly integrated, cutting-edge cellular solutions. The top-line performance of the business will probably be aided by  these developments.

However, macroeconomic uncertainty and the current geopolitical climate are expected to have a detrimental effect on the company's top-line performance. War in Europe, growing geopolitical tension between the United States and China and semiconductor manufacturing challenges will hurt its earnings prospects. In addition to the unfavorable smartphone market environment, supply shocks and intense competition would probably hurt the company's third-quarter sales

The Zacks Consensus Estimate for total revenues of the company stands at $727 million, indicating a decline from $1,114 million reported in the prior-year quarter. The consensus mark for earnings is currently pegged at 64 cents per share. It had reported earnings of $2.98 per share in the year-earlier quarter.

Earnings Whispers

Our proven model does not predict an earnings beat for Qorvo for the fiscal third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at 64 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Qorvo, Inc. Price and EPS Surprise

Qorvo, Inc. Price and EPS Surprise

Qorvo, Inc. price-eps-surprise | Qorvo, Inc. Quote

Zacks Rank: Qorvo has a Zacks Rank #3.

Stocks to Consider

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

Cambium Networks Corporation (CMBM - Free Report) is set to release quarterly numbers on Feb 16. It has an Earnings ESP of +9.27% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Universal Display Corporation (OLED - Free Report) is +1.06% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 23.

The Earnings ESP for Telephone and Data Systems, Inc. (TDS - Free Report) is +2.63% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 16.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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