Qorvo’s (QRVO - Free Report) stock has returned 92.5% year to date, outperforming the industry’s and the sector’s rally of 80.8% and 34.5%, respectively. In the same time frame, the stock has also fared better than the S&P 500 index’s growth of 29.9%.
The scintillating performance can primarily be attributed to robust mobile growth in China (primarily backed by 5G), and improved progress in Infrastructure and Defense (IDP) segment.
Further, Qorvo is well poised to gain from solid demand of its performance-tier for radio frequency (RF) Fusion based solutions and antenna tuning, discrete components and Bulk Acoustic Wave (BAW) based multiplexers.
Year-to-date Price Performance
Positive Earnings Estimate Revision
Qorvo has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters by 14.77%, on average.
Moreover, over the last 60 days, fiscal 2020 estimates were revised, driving the Zacks Consensus Estimate by 11.8%, to $5.69 per share.
Further, the company has a long-term expected EPS growth rate of 11.9%.
Let’s delve deeper and analyze the factors expected to drive this Zacks Rank #1 (Strong Buy) company’s financial performance in 2020. You can see the complete list of today’s Zacks #1 Rank stocks here.
Strength in Product Portfolio: A Key Catalyst
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.
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 drive IDP segment in 2020.
Being a prominent supplier to Apple (AAPL - Free Report) , seasonal iPhone upgrades hold promise for Qorvo. Moreover, the company is benefiting from share gains in Samsung’s portfolio. Specifically, 5G is expected to drive the company’s RF revenues in 2020 and beyond.
Booming WiFi-6 cycle, increasing proliferation of IoT and robust adoption of GaN (or gallium nitride) based solutions are expected to generate incremental revenues, in the days ahead.
Notably, the company recently expanded infrastructure solutions portfolio with dual-band integrated front end module (FEM) — QPF4800, designed for Wi-Fi 6 customer premise equipment.
Qorvo has also acquired Cavendish Kinetics, to strengthen RF microelectromechanical system (MEMS), switching, and tuning portfolio.
5G & Defense Deal Wins Favor Growth Prospects
Accelerating timeline for 5G deployment remains a tailwind. The company has participated in various 5G field trials and demonstrations.
The company has introduced new FEMs that can function on both pre-5G and 5G architecture. Moreover, Qorvo’s GaN technology enables the FEMs to support the emerging 5G infrastructure.
Qorvo unveiled new gallium arsenide (or GaAs) FEM, QPF4010, to aid 5G millimeter wave (mmWave) base stations in supporting additional capacity. Introduction of new products strengthen Qorvo’s GaN portfolio and provides it a competitive edge.
The company has also been selected by top four China-based smartphone OEMs to offer the latter with antenna tuning, high-band PAD and other integrated solutions for 5G smartphones.
Additionally, the company is capitalizing on the lucrative prospects in defense by rendering effective GaN solutions. In fact, Qorvo’s GaN-based S-band MMIC high power amplifier (HPA) has been chosen by Lockheed Martin (LMT - Free Report) to offer GaN modules to be utilized in the production of the U.S. Army’s Q-53 radar system.
Further, the company increased shipments of 5G massive MIMO infrastructure solutions to various OEMs. The company also secured new design wins across all 5.9GHz 5G frequency bands. The company’s expanding RF product portfolio pertaining to 5G and massive MIMO base stations bode well.
The recent deal wins and expanding product portfolio are expected to provide Qorvo a competitive edge in the RF market against Broadcom (AVGO - Free Report) , Qualcomm (QCOM - Free Report) and Skyworks (SWKS - Free Report) .
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