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Qorvo Standing Out From The Industry, According To Goldman Sachs

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Goldman Sachs maintained its Neutral rating on Qorvo Inc QRVO despite upbeat earnings, as it awaits further signs of consistent execution before becoming constructive on the stock.

Strong results at China business and IDP (Infrastructure and Defense Products) led Qorvo to report better-than-expected fourth quarter results and guide first quarter above consensus.

The company's EPS of $1.04 was 13 percent above the Street at $0.92 and 12 percent above guidance of $0.93. Quarterly revenue of $608 million came in 4 percent above Goldman estimates, and guidance of $600 million.

Qorvo, which provides core technologies and RF solutions for mobile, infrastructure and aerospace/defense applications, guided first quarter revenue to be $650 million, which came in 9 percent/4 percent above GS/Street. Non-GAAP EPS is guided at $1.05, 14 percent above the Street at $0.92.

"We view management's strong execution positively, especially given the challenging industry backdrop," analyst Toshiya Hari wrote in a note.

The analyst noted that company's mobile business performed strongly with the non-Apple mobile business up 16 percent sequentially (vs. -23 percent for Apple Inc. AAPL) and IDP growing 9 percent sequentially on broad-based strength in base stations and auto.

Hari said he would "closely monitor" Qorvo's inventory, which increased 23 percent to 125 days, and the sustainability of its China business into the second half.

"Finally, we believe QRVO's constructive comments on premium filters (i.e. fastest growing product group) have positive implications for the FBAR business at Broadcom Ltd AVGO, where results could surprise to the upside, in our view," Hari highlighted.

The analyst raised his 2016 operating EPS view for 2016 to $3.43 from $3.19 and 2017 to $3.36 from $3.15.

Hari also raised the price target to $48 from $44 on Qorvo shares, which rose 7.89 percent to $48.02.

DateFirmActionFromTo
May 2016Brean CapitalMaintainsBuy
May 2016Goldman SachsMaintainsNeutral
May 2016Goldman SachsMaintainsNeutral

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