Qorvo QRVO is scheduled to release third-quarter fiscal 2021 results on Feb 3.
The company’s fiscal third-quarter results are likely to reflect gains from increased demand for 4G and 5G mobile products utilized in flagship smartphones.
The company expects third-quarter fiscal 2021 revenues to be $1.06 billion (+/-$15 million). The consensus mark for revenues is pegged at $1.07 billion, which suggests an improvement of 22.75% from the year-ago quarter’s reported figure.
Non-GAAP adjusted earnings are anticipated to be $2.65 per share at mid-point for the fiscal third quarter. The Zacks Consensus Estimate for fiscal third-quarter earnings is pegged at $2.66 per share, which increased by one cent in the past 30 days. The figure indicates an improvement of 43% from the year-ago quarter’s reported figure.
Qorvo, Inc. Price and EPS Surprise
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Qorvo, Inc. price-eps-surprise | Qorvo, Inc. Quote
Factors to Note
Solid momentum in Qorvo’s mid-high-band and ultra-high band front end modules (FEM), which have been powering 5G smartphone launches, is likely to have contributed to the company’s fiscal third-quarter performance. Robust uptake of Bulk Acoustic Wave (BAW) filters, with the reopening of economies, might get reflected in the to-be-reported quarter’s top line.
Moreover, consistent traction witnessed for Qorvo’s solutions in defense (advanced radars and other electronic warfare products) and connectivity (Wi-Fi 6 and emerging IoT application) may have have positively impacted fiscal third-quarter performance.
Notably, surge in remote work and e-learning trends due to the COVID-19 pandemic is driving demand for Wi-Fi 6 products, which is likely to have contributed to the company’s performance in the quarter to be reported.
Also, momentum seen in shipments of programmable power management and motor control solution might get reflected in the fiscal third-quarter top line. The company’s programmable integrated circuits (ICs) are witnessing solid momentum driven by robust growth in data center, computing and gaming consoles.
Additionally, synergies from Custom MMIC, Decawave, Active-Semi and MEMS technology acquisitions have significantly expanded Qorvo’s capabilities and positions it well to benefit from growing demand for proximity awareness, secure payments and secure access for smartphones, automotive and IoT.
Further, strong adoption of the company’ Gallium nitride (GaN) amplifiers to support high-power applications and the deployment of Massive MIMO antennas is likely to have supported the IDP segment’s revenue growth in the quarter under review. Rapid 5G base station deployments globally hold promise for the segment’s top-line growth. Notably, Qorvo expects IDP unit to contribute $270 million during the fiscal third quarter.
Increased sales of RF content expansion for 5G devices might have favored Mobile Products (MP) division sales, which is expected to contribute $790 million during the quarter under review. Further, momentum in Apple’s AAPL new iPhone sales (up 17.2% year over year in December quarter) might have positively impacted revenue numbers in the quarter under review.
Nevertheless, growing expenses on product development amid stiff competition from Skyworks and Broadcom in the radio frequency semiconductor market are likely to have weighed on profitability in the fiscal third quarter.
What Our Model Says
Our proven model predicts an earnings beat for Qorvo this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Qorvo has a Zacks Rank #2 and an Earnings ESP of 0.78%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Here are some other stocks you may consider, as our proven model shows that these too have the right combination of elements to post an earnings beat this quarter.
Microchip Technology Incorporated MCHP has an Earnings ESP of +1.14% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Synaptics Incorporated SYNA has an Earnings ESP of +0.77% and a Zacks Rank of 2 at present.
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