Overview
Craig-Hallum on Wednesday trimmed its price target for Qorvo Inc. to $95.00 from $110.00, while maintaining a Buy rating on the semiconductor firm's stock. The move follows Qorvo's guidance for the March quarter, which fell short of consensus expectations and highlighted the company entering a seasonally weaker stretch.
Quarterly guidance and margins
Qorvo projected approximately $800.0 million in revenue for the March quarter, accompanied by gross margins of 48.5%. Management described this as part of a seasonal slowdown. The 48.5% margin projection is a modest improvement over Qorvo's trailing twelve-month gross profit margin of 45.12%, according to data cited in the briefing.
Outlook for Android and fiscal 2027
Company executives told analysts that a shift in product mix toward Android devices will continue to weigh on results for several years. Management expects fiscal 2027 revenues to be down by mid-single digits year-over-year as that transition plays out. Despite the anticipated decline in top-line revenue, Qorvo is guiding toward gross margins above 50% in fiscal 2027 and earnings per share approaching $7, reflecting the company's view of improving profitability over the medium term.
Analyst rationale and balance of risks
Craig-Hallum pointed to Qorvo's Defense and Aerospace business and ongoing cost savings programs as reasons to retain a Buy rating, even as it lowered its price target. The firm cited these elements as supportive of the company's longer-term earnings power amid a challenging macro backdrop and softer near-term mobile demand.
Market data referenced by analysts shows Qorvo trading at $78.04, with analyst price targets spanning a range from $70 to $128. Additional commentary highlighted management's active share repurchases and a solid liquidity position, as evidenced by a reported current ratio of 3.67, indicating assets comfortably exceed short-term obligations.
Recent results and peer analyst moves
Qorvo reported strong fiscal third-quarter results, posting earnings per share of $2.17, above the Wall Street consensus of $1.86. Revenue for the quarter came in at $993 million, slightly ahead of the $988.69 million forecast. Despite those better-than-expected results, the company issued guidance for the fiscal fourth quarter anticipating a 19% quarter-over-quarter revenue decline to $800 million, below the consensus estimate of $904 million.
The weaker fourth-quarter outlook has been attributed to challenges in Qorvo's Android business, including the company's exit from lower-margin operations and impacts from memory pricing. In response to the revised outlook, several analysts adjusted their valuations and ratings. Mizuho lowered its price target to $70 from $85 while maintaining a Neutral rating. Morgan Stanley trimmed its target from $110 to $84, citing pressures in the mobile business such as share loss in upcoming iPhone models and a quicker exit from lower-tier Android devices. KeyBanc reiterated a Sector Weight rating, noting that the company delivered strong results even as concerns persist around the Android segment.
What this means for investors
The mix of stronger recent quarterly results and a softer near-term guide leaves investors evaluating competing signals: near-term revenue pressure tied to the Android transition against management's expectations for higher margins and substantially higher EPS by fiscal 2027. Analyst actions following the guidance - including Craig-Hallum's target cut and maintenance of a Buy rating - reflect that tension between current execution issues and structural margin improvement initiatives.
Data points to watch
- March quarter guidance: roughly $800.0 million revenue, 48.5% gross margin.
- Trailing twelve-month gross profit margin: 45.12%.
- Fiscal 2027 targets from management: gross margins above 50%, EPS approaching $7.
- Company liquidity metric: current ratio of 3.67.
- Recent quarter: EPS $2.17 vs. $1.86 consensus; revenue $993 million vs. $988.69 million consensus.
Investors and market participants will be monitoring how the Android mix shift unfolds, the effectiveness of cost savings programs, and whether defense and aerospace demand can offset mobile weakness in the nearer term.