Morgan Stanley downgraded Qorvo's stock rating to Equalweight By Investing.com
On Friday, Morgan Stanley adjusted its position Qorvo Inc (NASDAQ :), from Overweight to Equalweight rating and lowered the price target to $120 from $130 previously. The decision comes after a reassessment of the company's growth prospects in the smartphone market.
A reduction in value reflects a change in expectations from the investment company. In December 2023, Morgan Stanley had upgraded Qorvo with the optimistic view that a modest increase in volume after the correction of the smartphone market would lead to better utilization and higher gross margins. The company expected that the company would not need significant growth to increase its earnings per share (EPS), which seemed an attractive proposition at valuation levels at the time.
However, the expected situation did not happen as expected. According to the investment firm, several factors prevented the expected result, including ongoing inventory problems and low demand for smartphones. These challenges have led to the conclusion that Qorvo's recovery will likely take a little longer than originally thought.
An analyst from Morgan Stanley expressed that Qorvo's previous development thesis did not play out due to these unforeseen problems. Due to the lack of a clear catalyst on the horizon to propel the stock forward, the company has decided to take a cautious stance.
This adjustment to Qorvo's vision reflects current market conditions and the company's performance in the face of ongoing industry challenges. Morgan Stanley's revised rating and price target suggests more moderate expectations for Qorvo's near-term financial performance.
In other recent news, Qorvo has been the subject of many analyst reviews. TD Cowen maintained a hold rating on the company, raising its price target from $110.00 to $125.00, citing the company's recent financial performance.
Similarly, Piper Sandler adjusted its price target for Qorvo from $105.00 to $120.00, maintaining a neutral rating. Meanwhile, Craig-Hallum raised his stock price to $142.00 from $125.00, maintaining a buy rating, highlighting Qorvo's improved engagement with Apple (NASDAQ: ) and the growth of its military and defense business.
In terms of financial performance, Qorvo reported mixed results for the first quarter of its 2025 fiscal year. Despite a 6% sequential decline in revenue to $887 million, the company posted a 36% increase compared to the same period last year. Non-GAAP gross margin stood at 40.9%, with non-GAAP diluted EPS of $0.87.
Looking ahead, Qorvo expects revenue of approximately $1.025 billion in the next quarter with non-GAAP net income between 46% and 47%, and non-GAAP diluted EPS between $1.75 and $1.95.
InvestingPro Insights
Adding to Morgan Stanley's analysis, the latest data from InvestingPro provides more context for Qorvo's current position. Despite the challenges presented in the smartphone market, InvestingPro Tips indicate that Qorvo's revenue is expected to grow this year, and 12 analysts have revised their earnings upward in the future. This suggests that although the recovery may be gradual, there is still hope for the company's financial position.
InvestingPro data shows Qorvo's market capitalization at $9.63 billion, with a profit of $4.01 billion in the last twelve months from Q1 2025. The company's revenue growth stands at 25.74% in the same period, which shows resilience in the face of market conditions . Additionally, Qorvo operates with a moderate level of debt and has liquid assets that exceed short-term obligations, which can provide financial flexibility as it navigates current market conditions.
It is worth noting that InvestingPro lists 7 additional tips for Qorvo, which give investors a broader view of the company's financial health and market conditions. This information can be especially useful given the changing story about Qorvo's growth in the smartphone sector.
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