Apple Chipmakers Skyworks, NXP, Avago Plunge On Qorvo Sales Outlook
Qorvo ( QRVO ) drew fellow Apple ( AAPL ) suppliers Skyworks Solutions ( SWKS ), NXP Semiconductors ( NXPI ), Cirrus Logic ( CRUS ) and Avago Technologies ( AVGO ) into a hole Friday, after the company late Thursday guided current-quarter sales below Wall Street’s consensus by $20 million. IBD’s 41-company Electronic-Semiconductor Manufacturing industry group fell by as much as 3.7% Friday and was down more than 2% in afternoon trading on the stock market today . Qorvo was down nearly 4%. Avago and Cirrus Logic stocks were down 5.5% and 4%, respectively. Shares of Skyworks and NXP were both down about 6% Friday afternoon. Apple stock was down nearly 2.5%. For its fiscal Q3 ended Jan. 2, Qorvo reported $620.7 million in sales and $1.03 earnings per share ex items, down 16% and 20%, respectively, vs. the year-earlier quarter. Both measures topped the consensus of 21 analysts polled by Thomson Reuters for $620.34 million and 94 cents. Qorvo also topped its Jan. 7 sales pre-announcement of $620 million, but missed its earlier, unchanged guide for $1.25-$1.30 EPS ex items. For the current quarter, Qorvo guided to $600 million in sales minus items and 90-95 cents EPS ex items. The consensus saw $620.1 million and 92 cents. At least four analysts cut their price targets Friday on Qorvo stock. Citigroup downgraded shares. DA Davidson analyst Thomas Diffely blamed Apple iPhone weakness as a “key contributor” to Qorvo’s 15% sequential decline in mobile sales. During Q3, Apple sales comprised 42% of Qorvo’s total revenue, he estimated in a research report. The March quarter will largely depend on Samsung’s Galaxy S7 ramp-up, MKM analyst Ian Ing wrote in a report. Qorvo is approaching the quarter cautiously. “We perceived an abundance of caution and potential volatility to both the current quarter as well as the calendar year,” he wrote. “That said, Qorvo feels ‘very good’ on designs for marquee phones with a September quarter, December quarter ramp.” Qorvo expects dollar-content growth in “the most highly-anticipated marquee smartphones this year at our three largest mobile customers,” CEO Robert Bruggeworth told investors on the company’s earnings conference call late Thursday. Infrastructure/defense sales grew sequentially, analyst Diffely noted. “We expect growth (in infrastructure and defense products) to continue for several more quarters buoyed by a combination of stable markets and a number of new product introductions,” he wrote. Ing and Diffely slashed their price targets on Qorvo stock to 65 from 66, and to 65 from 70, respectively. Both rate Qorvo stock a buy.