Why Qorvo (QRVO) Stock Is Trading Up Today

What Happened?

Shares of communications chips maker Qorvo (NASDAQ: QRVO) jumped 3.4% in the morning session after the company reported fiscal first-quarter results and guidance that surpassed Wall Street's expectations. The chipmaker announced fiscal first-quarter revenue of $818.8 million and non-GAAP earnings per share of $0.92, both of which easily beat analysts' forecasts. Investors were also pleased with the company's strong outlook. For its upcoming second quarter, Qorvo projected revenue of approximately $1.025 billion and non-GAAP earnings per share of $2.00, well ahead of consensus estimates. The strong results were attributed to broad-based demand. Following the report, several Wall Street analysts raised their price targets on the stock. For instance, Needham increased its target, citing expected content gains in Apple products and an expanding opportunity pipeline in the defense sector.

After the initial pop the shares cooled down to $84.92, up 0.5% from previous close.

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What Is The Market Telling Us

Qorvo’s shares are quite volatile and have had 15 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 9 months ago when the stock dropped 27.7% on the news that the company reported weak third-quarter earnings, with its revenue and EPS guidance for next quarter missing analysts' expectations. The company provided weak full-year revenue and gross margin guidance due to an unfavorable shift in smartphone demand as more consumers opt for lower-priced 5G smartphones rather than mid-range options. Notably, cheaper smartphones tend to fetch lower profit margins compared to mid-tier and flagship models. Even worse, Qorvo doesn't expect the trend to reverse, at least in the near term. On the other hand, Qorvo recorded a big improvement in inventory levels, and its revenue outperformed Wall Street's estimates. Overall, this was a weaker quarter for the company.

Qorvo is up 21.7% since the beginning of the year, but at $84.92 per share, it is still trading 29.1% below its 52-week high of $119.80 from July 2024. Investors who bought $1,000 worth of Qorvo’s shares 5 years ago would now be looking at an investment worth $660.01.

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