Qorvo shares hold rating, price target raised despite on modest growth By Investing.com

On Wednesday, TD Cowen maintained a Hold rating on Qorvo Inc (NASDAQ: NASDAQ:) but increased the company’s price target from $110.00 to $125.00. The adjustment follows Qorvo’s recent financial performance, which the firm views as a positive kickoff to the fiscal year, signaling a potential for modest year-over-year growth by Fiscal Year 2025.

The semiconductor company, known for its radio frequency solutions, has recently reported earnings that slightly exceeded expectations and provided a modestly raised forecast. This performance has contributed to TD Cowen’s heightened confidence in Qorvo’s ability to achieve growth in the coming years.

Despite the positive outlook on growth, TD Cowen expressed concerns about Qorvo’s gross margin recovery trajectory. The company is currently dealing with challenges such as higher cost inventory, underutilization, and fluctuations in quarterly revenue mix, which could impact its progress toward the long-term gross margin goal of over 50%.

While the analyst from TD Cowen reiterated the Hold rating, the new price target of $125.00 reflects an updated valuation based on the recent earnings report and the company’s fiscal projections. The price target suggests a level of cautious optimism about the company’s financial health and market position.

In other recent news, Qorvo Inc. reported mixed results for its first quarter of fiscal year 2025. Despite a 6% sequential decline in revenue to $887 million, the company posted a 36% increase compared to the same period last year.

The non-GAAP gross margin stood at 40.9%, with a non-GAAP diluted EPS of $0.87. Qorvo also repurchased $125 million of stock during the quarter.

Highlighting recent developments, Piper Sandler adjusted its price target for Qorvo from $105.00 to $120.00, maintaining a neutral stance. This adjustment follows Qorvo’s reported earnings that surpassed expectations, alongside a guidance that also exceeded consensus.

The company’s performance has been supported by ongoing efforts to secure content gains with its largest customer and the expected benefits from the increasing number of 5G-enabled devices within the Android market.

Looking ahead, Qorvo anticipates a revenue of approximately $1.025 billion for the next quarter with a non-GAAP gross margin between 46% and 47%, and non-GAAP diluted EPS between $1.75 and $1.95.

While Piper Sandler remains cautious due to the stock’s current valuation, Qorvo’s strategic initiatives in sectors like aerospace and defense and Internet of Things (IoT) connectivity could offer potential growth avenues.

InvestingPro Insights

As Qorvo Inc (NASDAQ: QRVO) garners attention with its updated price target from TD Cowen, real-time data from InvestingPro provides a deeper dive into the company’s financial health and stock performance. With a market capitalization of $10.69 billion, Qorvo operates with a notable P/E ratio (adjusted for the last twelve months as of Q4 2024) of 52.55, reflecting investor expectations for future earnings growth. The company’s revenue growth has been positive, with a 5.61% increase over the last twelve months as of Q4 2024, and an impressive quarterly surge of 48.73% in Q4 2024.

Two InvestingPro Tips highlight critical aspects of Qorvo’s strategy and financial position. Firstly, management’s aggressive share buyback program could be indicative of their confidence in the company’s intrinsic value. Secondly, the company’s liquid assets exceed its short-term obligations, providing financial flexibility and a measure of security for investors.

It’s also worth noting that while Qorvo has not been profitable over the last twelve months, analysts predict the company will return to profitability this year. This aligns with TD Cowen’s positive outlook and the increased price target, suggesting potential upside for investors. For those interested in a more comprehensive analysis, there are an additional six InvestingPro Tips available, which can be accessed with a subscription. Use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, providing an opportunity to make more informed investment decisions.

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