This low-cost inventory boosts communication for 21st century devices: Argus research
A bet on the growing demand for radio frequency solutions spanning multiple markets and a discount to competitors has made Argus Research optimistic about Qorvo, Inc. (NASDAQ: QRVO).
Analyst Qorvo: Jim Kelleher launched the Qorvo cover with a buy rating and a price target of $ 225.
Qorvo’s takeaways: Drivers of the bullish stance include Qorvo’s story of a strong growth-through-acquisition strategy that has led to a substantial number of synergistic benefits; its leadership position in front-end RF technology; and its present value, Kelleher said in a note.
Qorvo has multiple growth opportunities in acceleration areas such as IOT, data communications, force sensing solutions and biotechnology, the analyst said.
Since the company was founded in 2015, resulting from the merger of RF Micro Devices and Triquint Semiconductor, Qorvo has made more than five strategic acquisitions to help it maintain a strong presence in the mobility, infrastructure and defense, Kelleher said.
The company’s acquisitions have helped Qorvo create a “multiplicity” of RF devices, Kelleher said.
It is also important to note that despite a large number of acquisitions, Qorvo’s debt stands at only $ 1.7 billion, while its liquidity stands at $ 1.4 billion. dollars and that reported income in 2021 is $ 4.02 billion, the analyst said.
He expects Qorvo to maintain its grip on the growing front-end RF market.
Front-end RF technology includes several components that convert an input RF signal into an intermediate signal that devices can use, Kelleher said.
The demand for front-end RF technology is driven by the increase in the number of mobile devices in the world, the increase in content viewed by mobile device, the increase in machine-to-machine interaction due to the increasing adoption of l ‘IOT and the growth of communications and connectivity related to AI, augmented reality and virtual reality. autonomous and robotic factors, the analyst said.
Notably, data from analytics firm Yole Development shows that in 2018-2019, Qorvo held a prominent stake in front-end RF technology on Apple, Samsung, Huawei, Oppo, and Xiaomi smartphones, putting Qorvo ahead of its competition. Murata, Skyworks, Broadcom and Qualcomm. , according to Rosenblatt.
Regarding the $ 225 price target, Kelleher said Qorvo is undervalued relative to its peer group.
Despite growing revenue and EPS alongside its peers, and sometimes at a significantly higher rate, Qorvo trades at a discount to its peers based on absolute P / E, P / E relative, P / E, P / S and EV / EBITDA growth, the analyst said.
If he were to value Qorvo right now using peer multiples, Kelleher said the company should be at $ 280 / share, his forward-looking model would value the company’s shares in the middle of $ 300. The target of $ 225 results from a higher risk-adjusted total return than the expected return of the S&P 500, the analyst said.
QRVO price action: Qorvo shares were down 1.05% to $ 193.60 when last checked Thursday.