© Reuters. Qorvo (QRVO) Stock Drops as China Weighs on Outlook, Analysts Lower Price Targets

Shares of Qorvo (NASDAQ:) are down nearly 5% in premarket trading Thursday after the company issued a weaker-than-expected Q1 adjusted EPS forecast.

The company Q4 adjusted EPS of $3.12, up from $2.74 in the year-ago quarter and above the analyst consensus of $2.94. Adjusted revenue came in at $1.17 billion, up 8.7% YoY and above the expected $1.15 billion.

Adjusted gross margin stood at 52%, compared to 52.6% in the year-ago period and the consensus projection of 52%.

For Q1, the semiconductor company expects adjusted EPS in the range of $2 to $2.25, below the consensus estimates of $2.74. QRVO expects Q1 adjusted gross margin of roughly 50%, while analysts were looking for 51.8%. Revenue is expected in the range of $1 billion to $1.05 billion, compared with the consensus estimates of $1.12 billion.

“Revenue exceeded the midpoint of quarterly guidance, despite a dynamic and challenging macro environment… Despite challenges related to COVID lockdowns in China, the war in Ukraine and other disruptions, we continue to position the business for growth,” the company said.

Mizuho analyst Vijay Rakesh lowered the price target to $128.00 per share from the prior $135.00 to reflect softer guidance.

“We see some utilization headwinds likely to remain as QRVO works through elevated inventory levels. QRVO sees capex ~flat q/q in the JunQ (MarQ ~$51M) with a continued focus on expanding BAW and GaAs capacity, and LTA support,” Rakesh said in a client note.

The analyst believes the new PT fairly values the company and reflects “headwinds from elevated inventory, relatively less iPhone exposure, and increasing RF competition.”

UBS analyst Timothy Arcuri also lowered the price target to $135.00 per share from the prior $145.00.

“The good news is that QRVO will have much easier comps as market issues in China may start to normalize toward year-end and moving into 2023 and Samsung is becoming a solid tailwind as years of being misaligned on architectures (QRVO was, to some degree, focused on AAPL) is giving way to much higher content going forward in both the premium and mass tiers,” Arcuri said in a note.

By Senad Karaahmetovic

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