Qorvo’s Strategic Shift and Market Exposure: Hold Rating Amidst Uncertainty in ACG Growth and Android Market Exit

Analyst Krish Sankar of TD Cowen maintained a Hold rating on Qorvo, with a price target of $95.00.

Krish Sankar has given his Hold rating due to a combination of factors related to Qorvo’s strategic shifts and market exposure. The company has been actively reducing its involvement in the low-tier Android market, particularly in China, which has resulted in a decrease in its China exposure from approximately 19% to 10.5% between the June and September quarters. This strategic exit is seen as a positive move, potentially increasing the likelihood of successful mergers and acquisitions.
Despite these changes, the fundamental outlook for Qorvo remains largely unchanged, with only a slight adjustment in the earnings per share forecast for fiscal year 2027. The price target remains steady at $95, reflecting a valuation of about 15 times the anticipated earnings. However, there is some uncertainty regarding the growth of the ACG segment, as future revenues will heavily depend on content demand from its largest customer. This cautious stance from management, along with the anticipated revenue impacts from the Android market exit, supports the Hold rating.