Today saw a number of big-name companies surge on good news. One of those was one of Apple’s suppliers, Qorvo (NASDAQ: QRVO), which jumped 7 percent today as Goldman Sachs doubled down on the company’s future market potential. While currently the company is focused on supplying chips for Apple’s iPhone’s, Goldman went on to stress that with the 5G network being rolled out across the country, this newfound demand is going to have an impact on stock prices.
Toshiya Hari, an analyst at Goldman Sachs, raised his target price for the company to $79 per share, suggesting that the company could rise between 10-15 percent in the short-to-mid-term future. In response to this move, the markets reacted by moving the company’s stock up 6.9 percent today according to Barrons. Previously, the analyst had the stock’s output at a “neutral” rating and had a previous price target of around $66 per share.
Shares of the company were previously trading around 13 percent below their 52-week high following Apples announcement that the tech giant’s iPhones weren’t selling as well as they thought it would. This weak performance led to the company cutting component orders, hitting Qorvo particularly hard as over 70 percent of its sales from mobile devices.
This change in opinion came when analysts at various companies attended the Mobile World Congress, which brought up the ongoing trend of 5G’s rollout, which is something that’s expected to continue through to 2021. He went on to say that the company’s valuation metrics aren’t reflecting this potential revenue opportunity, hence why the analyst chose to bump up his target price on the company.
However, plenty of analysts are still unsure over Qorvo’s future, with 11 out of 20 analysts covering the company having either a “hold” or a “sell” recommendation, despite the potential role 5G implementation could have on the company.
One of Qorvo’s competitors, Xilinx (NASDAQ: XLNX), has been one of Wall Street’s darlings over the past year as its stock has readily risen despite the weak state of the semiconductor industry. In comparison to Qorvo, however, the chipmaker has been focusing on targeting fast-growing niches such as the artificial intelligence sector as well as 5G wireless deployments in other countries such as South Korea.
Last quarter, they reported their communications revenue increased by 41 percent. In contrast to this, Qorvo relies considerably on its agreement with Apple, which has been the main reason it has struggled while its rivals have done better.
However, according to some companies, it’s predicted that there could be up to eight 5G smartphone models coming out by mid-2019. Should this be the case, Qorva would be well positioned to take advantage of this trend.
Qorvo Company Profile
Qorvo represents the combined entity of RF Micro Devices and TriQuint Semiconductor, which merged with one another in 2014. The company specializes in radio frequency filters, power amplifiers, and front-end modules used in many of the world’s most advanced smartphones. Qorvo also has a suite of products sold into a variety of nonsmartphone end markets, such as wireless base stations, cable TV and networking equipment, and infrastructure and military applications. – Warrior Trading News
