Qorvo (QRVO), mcap=$11bn, price $108 vs $90

QRVO pitch:
Qorvo is a leading smartphone radio frequency semiconductor supplier at trough earnings & multiple.
– Shipments are set to rebound in 2023 from a China lockdown-driven low.
– Secular content gains are expected over the next five years from increasing 5G penetration.
– RF modules are vital for any smartphone and RF content per phone is set to increase with 5G vs. 4G.
– An oligopolistic industry that requires expertise in niche semi-material manufacturing processes.
– Dominated by 4 large players – $QRVO, $SWKS, $QCOM, and $AVGO.
– The market has grouped Qorvo into the broader group of semi-peers, many of which are still over-earning due to COVID pull fwd, so it is applying a below-normal multiple to already depressed forward estimates.

QRVO valuation:
– $11.6 EPS in 2023 and 13x multiple results in a price target of $90/share.
– EPS target compares to $6.81 in 2018, $6.78 in 2019, and $9.43 in CY20.

Exp. gain: +68% to $90/share in the base case scenario.

Full write-up (free guest account required):