Qorvo Stock Dips Ahead Of Q3 Results, Even As Analyst Sees Activist Investor-Led Upside: Retail Sentiment Improves

With analysts forecasting a significant profit decline, Qorvo's potential restructuring under activist pressure draws focus ahead of its earnings release.

Shares of Qorvo Inc. (QRVO) slipped over 2% in mid-day trading Tuesday, as investors awaited the company’s third-quarter earnings release after the market close. 

Analysts forecast earnings per share (EPS) of $1.21 on revenue of $911 million, representing a 15% year-over-year decline in revenue. 

Net profit is also expected to drop nearly 40% to $82 million.

Piper Sandler upgraded the chip maker’s stock to ‘Overweight’ from ‘Neutral’ ahead of the earnings announcement, raising its price target to $110 from $85, which implies a potential upside of nearly 28%. 

The upgrade stems from optimism about Qorvo's fundamentals, particularly with activist investor Starboard Value in the mix. 

The brokerage noted that Qorvo is "ripe for this activist to come in and derive operational and capital efficiencies," according to a research note cited by TheFly.

Piper estimates the company could realize $250 million to $300 million in operating efficiencies if it adopts a similar operating expense structure to its competitor, Skyworks Solutions (SWKS). 

Mizuho Securities also revised its price target for Qorvo last week, increasing it to $90 from $80, while maintaining a ‘Neutral’ rating on the stock. 

However, it highlighted concerns about the company’s exposure to Chinese manufacturers as a key challenge.

On Stocktwits, retail sentiment around the stock improved to the ‘neutral’ zone from ‘bearish’ a day ago as message volumes remained at ‘normal’ levels. 

Investors remain cautiously optimistic after Qorvo beat revenue expectations last quarter by 1.8%, posting $1.05 billion in revenue, though this marked a 5.2% decline year-over-year.

Qorvo’s stock has climbed 27.6% year-to-date and is heading into its earnings report with an average analyst price target of $92.74, implying a modest 7% upside.

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