Qorvo Could Earn $9.63 EPS by 2026 With Activist Engagement, Morgan Stanley Upgrades Stock – Qorvo (NASDAQ:QRVO)

Morgan Stanley Promoted analyst Joseph Moore Corfu company QRVO to overweight from equal weight, raising the price forecast to $106 from $90.

Moore notes that he saw value in Qorvo stock and tried to capture it through promotions, but the results were only modest.

The analyst also highlighted challenges in the radio frequency space, especially with pressure on Chinese business, increasing focus in other areas.

Per Moore, while the radio frequency market is served by high performing companies such as Broadcom, Skyworks SolutionsQorvo will continue to grow, and will remain very focused, primarily driven by high-end global phones.

Read also: Apple’s AI advances can’t make up for Chinese market slowdown, analyst says

With the participation of activist Starboard, the analyst sees Qorvo as having the potential to renew an earnings recovery.

According to Moore, Qorvo could achieve $9.63 in EPS by shifting from a “growth through diversification” strategy to focusing on its core competency in radio frequencies starting in calendar year 2026.

The analyst expects gross margins to be 48.0% and operating margins to be 25.8% by 2026, both in line with the pre-pandemic average from 2015 to 2019.

The analyst notes that Qorvo can achieve this by reducing, but not eliminating, internal leverage to stabilize gross margins over cycles, realigning operating expenses around the core RF portfolio, and leveraging its discounted multiple of cash return to accelerate EPS growth.

While there is potential for overall revenue growth, especially with Apple Inc Moving on to modem, the analyst stresses that EPS growth forecasts are not dependent on strong revenue assumptions. Given Starboard’s track record and history with Qorvo, the analyst sees significant opportunity to unlock value through a strategic course correction.

Price action: QRVO shares are trading 5.75% higher at $89.05 at last check on Tuesday.

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