How High Will Qorvo Stock Go?

In Q12024, the worldwide semiconductor manufacturing pie grew slightly. Sales of electronics increased by 1% compared to last year, and Q2 2024 is expected to see a further 5% year-over-year increase.

The upcoming federal subsidies for semiconductor manufacturers will result in a turning point, ending America’s long-lasting decline in global chip production. By 2032, the United States will triple its capacity to produce chips within its borders.

The boost is possible thanks to $39 billion in funding from the CHIPS Act that supports both strategic expansion and competitiveness improvement. In a study released recently, it is predicted that the share of America in worldwide chip production will be 14% by 2032. This represents an increase from its present level of 10%.

Plus, trends toward global connectivity and the growth of smarter, linked devices are causing more data traffic and efficiency requirements in networks. The backdrop supports the demand for products and technologies of Qorvo, a global wireless, wired, and power solution provider.

It’s worth mentioning that shares of Qorvo have gone up by just 3% in the last six months, but is the future brighter?

Qorvo Is Snapping Up Deals

In January, Quorvo announced its acquisition of Anokiwave, a primary supplier of high-quality silicon integrated circuits that are used in intelligent active array antennas for defense, aerospace, SATCOM, and 5G network deployment. The ICs of Beamforming and IF-to-RF conversion from Anokiwave will supplement Qorvo’s RF front-end collection.

Qorvo also finalized a significant deal with Luxshare Precision Industry in December 2023, involving the acquisition of Qorvo’s assembly and test facilities in Beijing and Dezhou, China.

These facilities are key to manufacturing Qorvo’s advanced cellular products. Luxshare’s manufacturing expertise is set to enhance production capacity globally.

The Beijing and Dezhou factories are integral to Qorvo’s longstanding production network. Meanwhile, Luxshare’s high reputation in large-scale manufacturing is set to make the company’s global supply chain.

Luxshare, which is widely regarded by top electronic businesses due to its large-scale manufacturing skills, will likely provide quality and consistency that matches Qorvo’s requirements. This should further improve Qorvo’s worldwide supply chain.

The CFO of Qorvo, Grant Brown, emphasized that the deal with Luxshare matches the company’s aims to lower capital intensity, back up long-term gross margin goals, and guarantee ongoing service for Chinese clients. It should also help Qorvo’s market standing as well as its operating efficiency.

Qorvo Is Cash Rich

Big-picture global macro trends are favorable to Qorvo now and are driving customer demand for efficiency, latency, throughput, and other crucial performance measures where the company enjoys a competitive edge.

In the March quarter, Qorvo reported year-over-year growth in revenue from its three operating segments. During Q4 of fiscal 2025, which concluded on March 30, 2024, Qorvo’s revenue rose by 48.7% year-over-year to $940.99 million.

The company’s non-GAAP gross profit also surged by 53.3% from the same period last year to reach $400.38 million. Likewise, non-GAAP operating income experienced an increase of about 335.1% from $33.84 million during this preceding comparable timeframe.

Further, the company’s non-GAAP net income and non-GAAP EPS rose by 426.6% and 434.6% to $135.53 million and $1.39 per share, respectively.

As of March 30, 2024, there was $1.03 billion in cash and cash equivalents, compared to $808.76 million on April 1, 2023, leaving management with an ample pile for further acquisitions and re-investment

Is Qorvo Profitable?

Qorvo is not profitable at this time on an annualized basis but the latest report revealed a glimpse of hope with $2.7 million of net income.

The reality is the top line has been highly volatile which has made the bottom line highly unpredictable. While the past two quarters have seen top line growth of over 45%, the prior six quarters all experienced year-over-year revenue declines. 

In management’s favor is that free cash flow has been positive for the past twelve quarters in a row which has helped to support the balance sheet cash that sits around $1 billion.

Qorvo has stable profit margins, with a trailing 12-month EBITDA margin of 10.89%. The trailing-12-month levered FCF margin of Qorvo stands at 15.86%.

How High Will Qorvo Stock Go?

According to 24 analysts, Qorvo stock can rise to as high as $109.94 per share, reflecting 12.5% upside opportunity.

Analysts also forecast an EPS increase of 109.7% from last year’s same quarter to $0.71 per share. In each of the previous four quarters, management has beaten consensus revenue and EPS estimates. 

In terms of valuation, Qorvo has a forward non-GAAP P/E ratio of 16.25x, which is 32.2% lower than the industry average of 23.96x, and also its forward EV/EBITDA ratio stands at 10.88x, marking a difference of 26.7% from the industry average which is around 14.85x.

The forward price-to-sales ratio sits at 2.48x, 14.3% below the industry norm of 2.89x, and its forward price-to-cash flow ratio stands at 12.06x, which falls significantly under the average of 23.26x times for the industry.

It’s also noteworthy that management is engaged in a share buyback at this time, signaling confidence in the valuation. Combined with the forecast for growing net income this year, the future is looking brighter than the past for Quorv shareholders.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.