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Apple supplier Qorvo sees its stock dip 10% on weak guidance

Published 05/02/2024, 04:27 AM
Updated 05/02/2024, 05:58 PM
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QRVO
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GREENSBORO, N.C. - Qorvo (NASDAQ: NASDAQ:QRVO), a prominent provider of connectivity and power solutions, unveiled its fiscal 2024 fourth quarter financial results, which concluded on March 30, 2024.

The company outperformed analyst revenue estimates with a 49% increase in quarterly revenue year-over-year (YoY), reaching $941 million compared to the consensus estimate of $927.23 million. Adjusted earnings per share (EPS) for the quarter were $1.39, surpassing the analyst estimate of $1.21.

Despite the strong performance in the fourth quarter, Qorvo's stock tumbled by 10% due to a weaker-than-expected outlook for the first quarter of fiscal 2025. The company's guidance for Q1 2025 adjusted EPS is set at $0.60 to $0.80, significantly below the analyst consensus of $1.27.

Additionally, Qorvo anticipates revenue for Q1 2025 to be between $825 million and $875 million, which is also lower than the consensus estimate of $917.7 million.

Bob Bruggeworth, Qorvo's president and CEO, highlighted the company's revenue growth across all operating segments and pointed to global macro trends that bolster customer demand for performance metrics where Qorvo holds a competitive edge. The recent acquisition of Anokiwave is expected to further enhance Qorvo's technology portfolio and drive growth.

Grant Brown, Qorvo's CFO, noted the company's significant content gains and revenue growth in its defense and aerospace business during fiscal 2024. However, he acknowledged the seasonal downturn in flagship smartphone ramps and large defense programs, expecting product mix to shift towards mass market 5G products in the June quarter. For the full year of fiscal 2025, Qorvo predicts modest revenue growth and margin improvement.

The market's negative reaction to the soft guidance underscores investor concerns over the upcoming quarter's performance. Qorvo's stock movement reflects the apprehension surrounding the expected decrease in revenue and adjusted EPS. Despite the robust results for the fourth quarter, the company's outlook suggests a cautious approach to the start of fiscal 2025.

Following the report's release, Bank of America analysts reiterated an Underperform rating on the stock, citing below-consensus Q1 outlook, soft year-over-year sales growth, rising operating expenses intensity "and still high customer concentration risks in a mobile industry that includes 3 tough rivals (Qualcomm (NASDAQ:QCOM), Skyworks (NASDAQ:SWKS),
Broadcom (NASDAQ:AVGO)) and emerging China domestic rivals."

"On the positive side, QRVO expects to gain content in Apple’s next iPhone 16 along with a strong position in its defense business," they added.

Meanwhile, Rosenblatt Securities analysts shared slightly more bullish comments, saying they expect the company to improve its smartphone and Defense & Aerospace positions "which could result in upside growth in FY26."

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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