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Investors Business Daily
Investors Business Daily

Chipmaker Qorvo Beats Quarterly Targets But Guides Low

Chipmaker Qorvo late Wednesday handily beat expectations for its fiscal third quarter but it badly missed views with its outlook. Qorvo stock fell in extended trading during an active day for semiconductor stocks.

Greensboro, N.C.-based Qorvo earned an adjusted 75 cents a share on sales of $743 million in the quarter ended Dec. 31. Analysts polled by FactSet had expected earnings of 62 cents a share on sales of $726 million.

On a year-over-year basis, Qorvo earnings dropped 75% while sales sank 33%. Qorvo customers have reduced their orders amid high chip inventories.

For the current quarter, Qorvo predicted earnings of an adjusted 13 cents a share on sales of $620 million. That's based on the midpoint of its guidance. However, Wall Street had forecast adjusted earnings of 64 cents a share on sales of $732 million in the March quarter.

Qorvo Stock Falls After Report

In after-hours trading on the stock market today, Qorvo stock dropped 1.4% to 112. During the regular session Wednesday, Qorvo stock rose 4.5% to close at 113.53.

"We are encouraged by the channel inventory consumption we saw in the December quarter, and we expect channel inventories will continue to be consumed in the March quarter," Chief Financial Officer Grant Brown said in a news release.

He added, "In addition to ongoing alignment of supply and demand, we expect unit volumes across our businesses will recover later this year, and we have secured content gains in large customer programs, all of which will support improved financial performance."

Qorvo makes chips for consumer electronics, smart home, automotive, network infrastructure, health care, and aerospace and defense applications. The company specializes in communications and power chips.

Semiconductor Stocks Are Rocking

Other semiconductor stocks moving on earnings news Wednesday included Advanced Micro Devices and Silicon Laboratories.

Late Tuesday, AMD delivered better-than-expected results for the fourth quarter but offered soft guidance for the current quarter. Still, AMD stock jumped 12.6% to 84.64 on Wednesday.

Before the market open Wednesday, Silicon Labs smashed analyst estimates for the fourth quarter and with its guidance. The Internet-of-Things chipmaker earned an adjusted $1.31 a share, up 70% year over year, on sales of $257 million, up 23%. Wall Street had forecast  earnings of 98 cents a share on sales of $250 million.

For the first quarter, Silicon Labs expects to earn an adjusted $1.12 a share on sales of $247 million, based on the midpoint of its outlook. Analysts were looking for earnings of 77 cents a share on sales of $241 million.

Silicon Labs stock rocketed 14.1% to close at 179 on Wednesday.

The Philadelphia semiconductor index, known as SOX, rose 5.2% on Wednesday. The SOX includes the 30 largest semiconductor stocks traded in the U.S.

Qorvo Stock Has Middling Composite Rating

Qorvo stock ranks No. 14 out of 31 stocks in IBD's semiconductor manufacturing industry group, according to IBD Stock Checkup. It has a middling IBD Composite Rating of 64 out of 99.

Meanwhile, Silicon Labs ranks sixth out of 34 stocks in IBD's fabless semiconductor industry group. It has a Composite Rating of 91.

IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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