Qorvo Inc (NASDAQ:QRVO) shares are tumbling more than 14% to $60.45 after the company reported soft Q2/F’16 guidance which have been accompanied by weaker than anticipated sales for its wireless infrastructure business in its IDP division combined with inventory at some of its Chinese smartphone customers. To the company’s credit, Q1/F’16 sales of $674 million and non-GAAP EPS of $1.09 were above consensus estimates.
In reaction, Canaccord Genuity analyst Michael Walkley reduced the price target for QRVO from $89 to $77, while reiterating a Buy rating on the stock. The new price target implies an upside of 31% from current levels.
Walkley commented, “Despite the weak guidance, we believe Qorvo has a broad RFIC portfolio for the mobile device market and is well positioned to benefit from strong secular RFIC TAM growth trends. Further, we believe Qorvo has an industry-leading non-handset related RFIC portfolio addressing the higher-margin defense & aerospace and networks infrastructure markets. Finally, as evidenced by the strong margins achieved in Q1/ F’16, we believe Qorvo can continue to leverage cost synergies through consolidating fab facilities, optimizing R&D expenditures, and eliminating duplicate costs.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst T. Michael Walkley has a total average return of 20.9% and a 64.5% success rate. Walkley has a -3.2% average return when recommending QRVO, and is ranked #17 out of 3718 analysts.
Out of the 9 analysts polled by TipRanks, 8 rate Qorvo Inc stock a Buy, while 1 rates the stock a Hold. With a return potential of 53.3%, the stock’s consensus target price stands at $90.31.