Earnings Beat: Brean Capital Weighs In on Qorvo Inc (QRVO) and Skyworks Solutions Inc (SWKS)

In the thick of earnings season, there is never a dull moment for tech investors. Today, Brean Capital analyst Mike Burton weighs in following earnings from the communications chip company Qorvo Inc (NASDAQ:QRVO) and semiconductor company Skyworks Solutions Inc (NASDAQ:SWKS)

Qorvo Inc

Qorvo shares are up nearly 16% after the company reported fiscal second-quarter results above consensus estimates. While revenue guidance was below the Street’s consensus, overall EPS guidance was in line with expectations and much better than many investors feared.

In reaction, Brean Capital’s Burton reiterated a Buy rating on Qorvo, while reducing the price target to $70 (from $80), which implies an upside of 31% from current levels.

Burton commented, “Overall, we believe the December quarter guidance, while not good, was better than investors’ low expectations, and when coupled with QRVO confidently authorizing a $1 billion share buyback is likely to drive the shares higher in the near term. Looking forward, we continue to be enthusiastic about the Company’s content growth and synergy potential which should drive margins in CY16. We are adjusting our estimates for the updated guidance and dropping our TP to $70 based on 11.7x our CY17 earnings of $6.01.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mike Burton has a total average return of 9.8% and a 55.2% success rate. Burton has a -33.6% average return when recommending QRVO, and is ranked #430 out of 3827 analysts.

Out of the 6 analysts polled by TipRanks in the last 3 months, 3 rate Qorvo stock a Buy, while 3 rate the stock a Hold. With a return potential of 18.12%, the stock’s consensus target price stands at $62.

Skyworks Solutions Inc

Skyworks Solutions shares rally after the company reported better-than-expected results for its fourth quarter of fiscal 2015, and issued guidance ahead of the Street’s consensus.

In his research note, Burton wrote, “Skyworks reported its 10th straight beat & raise quarter last night, delivering solid September results in line with their prelim and issuing December guidance ahead of the Street’s consensus. We believe the strength is largely due to the Apple ramp where SWKS gained considerable share but are also encouraged by growth in the Company’s Broad Markets segment. While we are lowering our sequential revenue decline in the March Quarter over our concerns for AAPL seasonality and more competition at Samsung, our EPS expectations are virtually unchanged when considering the Company’s newly issued mid-term operating model. SWKS continues to deliver above-industry growth in revenues and best-in-class operating margins.”

Burton reiterated a Buy rating on Skyworks Solutions shares, with a price target of $100, which implies an upside of 18% from current levels. According to TipRanks.com, Burton has a 57.5% average return when recommending SWKS, and is ranked #430 out of 3827 analysts.

Out of the 8 analysts polled by TipRanks, 7 rate Skyworks Solutions stock a Buy, while one rates the stock a Hold. With a return potential of 37.73%, the stock’s consensus target price stands at $115.80.


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