Qorvo, Inc. Just Beat EPS By 44%: Here's What Analysts Think Will Happen Next
Last week, you might have seen that Qorvo, Inc. (NASDAQ:QRVO) released its quarterly result to the market. The early response was not positive, with shares down 3.7% to US$106 in the past week. Revenues were US$869m, approximately in line with what analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$1.36, an impressive 44% ahead of estimates. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
See our latest analysis for Qorvo
Taking into account the latest results, the most recent consensus for Qorvo from 21 analysts is for revenues of US$3.49b in 2021, which is a decent 11% increase on its sales over the past 12 months. Statutory earnings per share are expected to bounce 27% to US$3.70. Yet prior to the latest earnings, analysts had been forecasting revenues of US$3.41b and earnings per share (EPS) of US$4.05 in 2021. So it's pretty clear consensus is mixed on Qorvo after the latest results; while analysts lifted revenue numbers, they also administered a minor downgrade to per-share earnings expectations.
Curiously, the consensus price target rose 17% to US$127. We can only conclude that the forecast revenue growth is expected to offset the impact of the expected fall in earnings. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Qorvo analyst has a price target of US$150 per share, while the most pessimistic values it at US$102. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. Next year brings more of the same, according to analysts, with revenue forecast to grow 11%, in line with its 9.7% annual growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 8.3% next year. So it's pretty clear that Qorvo is forecast to grow substantially faster than its market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Qorvo. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Qorvo analysts - going out to 2022, and you can see them free on our platform here.
You can also view our analysis of Qorvo's balance sheet, and whether we think Qorvo is carrying too much debt, for free on our platform here.
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