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Qorvo Sidesteps Apple iPhone Drag To Crush Fiscal Q4 Views

Qorvo ( QRVO ) sidestepped Apple ‘s ( AAPL ) iPhone drag late Wednesday with a Wall Street-crushing fiscal Q4 earnings report, and with guidance that — unlike rival Skyworks Solutions ( SWKS ) — topped consensus expectations. In after-hours trading, Qorvo stock rocketed more than 8% after closing down 1.2% in Wednesday’s regular session, and leading shares of radio-frequency rivals Skyworks and Broadcom ( AVGO ), whose stocks both rose a fraction. For its fiscal Q4 ended April 2, Qorvo reported $608.1 million in sales and $1.04 earnings per share minus items, down a respective 4% and 6% vs. the year-earlier quarter, but topping analysts’ model for $599.2 million and 92 cents. Three months ago, Qorvo guided to $600 million and 90-95 cents. Qorvo ended fiscal 2016 with $2.61 billion in sales, up 53%, and $4.38 EPS ex items, down 8%. Sales edged the consensus of 20 analysts polled by Thomson Reuters for $2.6 billion, but EPS topped by 12 cents. Current-quarter guidance for $650 million in sales and $1.05 EPS minus items would be down 6% and 12% year over year, but that’s ahead of analyst expectations for $628.6 million and 96 cents. Last week, Skyworks reported fiscal Q2 metrics that topped views, but shares crashed 6.9% on Q3 sales guidance that missed by about $50 million. Analysts called for a similar report from Qorvo, which is more heavily exposed to Apple’s iPhone product cycle. Apple iPhone sales have slowed — for the first time — ahead of the iPhone 7 release expected in September. But all three RF suppliers will ramp up on the iPhone 7, Goldman Sachs analyst Toshiya Hari says.

‘Apple Fallout’ Likely To Tug Qorvo’s June View, But iPhone 7 Nears

Apple ‘s ( AAPL ) iPhone drag will seize another victim Wednesday, a Goldman Sachs analyst suggested Tuesday, ahead of Qorvo ‘s ( QRVO ) quarterly earnings report, with Wall Street forecasting the chipmaker’s first year-over-year sales decline in eight quarters. But the Apple trough will likely resolve in the second half of the year, when the iPhone 7 ramps, Goldman Sachs analyst Toshiya Hari wrote in a research report. He expects radio-frequency chip rivals Qorvo, Broadcom ( AVGO ) and Skyworks Solutions ( SWKS ) to see growth from the release of the iPhone 7, expected in September. “While unit headwinds and inventory burn at Apple could weigh on results, we believe we are at the trough of the cycle and expect RF fundamental to improve,” Hari wrote. “The RF content growth story is still fully intact.” First, though, heavily-Apple-exposed Qorvo has to survive the March quarter, for which Apple reported its first-ever year-over-year decline in smartphone sales. For Qorvo’s fiscal Q4, the consensus of 20 analysts polled by Thomson Reuters models $599.2 million in sales and 92 cents earnings per share minus items, down a respective 6% and 17% vs. the year-earlier quarter. Qorvo reports after the close Wednesday. Three months ago, Qorvo guided to $600 million in sales and 90-95 cents EPS ex items. Qorvo’s sales and EPS have decelerated for the past three and four quarters, respectively. Last quarter, EPS fell for the first time since September 2012. For the fiscal year, Qorvo is expected to report 52% sales growth, to $2.6 billion. But analyst consensus calls for a 10% decline in EPS ex items, to $4.26. In the stock market today , Qorvo stock rose a fraction to 45.04, while Broadcom fell 2% and Skyworks fell a fraction. Last week, Skyworks’ fiscal Q2 metrics topped analysts’ consensus, but Q3 guidance missed. Then, Skyworks stock dropped 6.9%. Hari says Qorvo stock could experience a similar dip. But Qorvo shares are already down 12% over the past 12 months, and “weakness may not be as pronounced,” he wrote. Hari cut his price target on Qorvo stock to 44 from 47 but kept his neutral rating. He trimmed his Broadcom stock price target to 171 from 175, but he still rates it and Skyworks both a buy. Among the three, Qorvo is the most Apple-exposed, Hari wrote. “We expect investors to focus on its (fiscal Q1) guide (impact of Apple fallout) and execution (share gains at Samsung),” he wrote.

Skyworks Growth Threatened By ‘Unfavorable’ Apple iPhone Comparison

Skyworks Solutions ( SWKS ) is “rebuilding” after Apple ‘s ( AAPL ) iPhone flop last quarter but is still looking at double-digit growth in the second half of 2016, MKM analyst Ian Ing wrote in a research note after Apple-supplier stocks broadly toppled last week, when the iPhone maker reported its first-ever year-over-year decline in smartphone sales. In early trading Monday, Skyworks stock was down a fraction, as were shares of radio-frequency chip rivals Broadcom ( AVGO ) and Qorvo ( QRVO ). In early trading on the stock market today , Apple stock was also down a fraction, near 93, and down 10.5% since reporting its March-quarter earnings after the close Tuesday. That day, Apple reported  not only its first-ever year-over-year drop in iPhone sales, but also its first quarterly revenue decrease in 13 years. Skyworks’ Q2 guidance , released late Thursday, slugged that stock when its sales view missed by $50 million. But after just 2% sales growth last quarter, Skyworks expects double-digit growth in September, though strength in China and with Samsung might not be enough to outweigh an “unfavorable” year-over-year iPhone comparison. Last September, Apple sold 13 million iPhone 6S units in three days following the release. Chinese smartphone-makers are facing a largely saturated market, Ing noted. About 45% of China’s mobile phones are on 4G now. Wall Street largely expects a pause as the industry transitions to 5G — but that refresh is still more than a year away. Ing retained his buy rating on Skyworks stock, but he cut the price target to 93 from 98. At least two other analysts rated Skyworks a buy over the weekend.