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Why Qorvo Inc. Stock Jumped Thursday

A chart showing a stock price moving higher

What happened

Shares of radio-frequency company Qorvo (NASDAQ: QRVO) rose as much as 18.8% on Thursday, following the company's third-quarter financial results for fiscal 2018. The stock is up 13.6% at the time of this writing.

Optimism toward Qorvo's stock on Thursday likely reflected its better-than-expected revenue and non- GAAP earnings per share.

Shares initially traded lower after the results because of weaker-than-expected guidance for the company's fourth quarter. But Drexel Hamilton analyst Cody Acree released a note to clients saying expectations for guidance to be weak were already baked into the stock, as shares pulled back about 20% from highs in November. The note may have helped the stock rebound.

A chart showing a stock price moving higher

Image source: Getty Images.

So what

Qorvo reported third-quarter revenue and adjusted earnings per share of $845.7 million and $1.69, respectively. These results compared to consensus analyst estimates for revenue of $840.9 million and adjusted earnings per share of $1.60.

Qorvo's non-GAAP gross margin was 48%, up from 47.4% in its second quarter of fiscal 2018.

It's also worth noting that Qorvo's results compared well to its own guidance for the quarter. Management had guided for revenue between $830 million and $850 million, and a gross profit margin of 47.5%.

Now what

Management said it expects fiscal fourth-quarter revenue to be between $645 million and $665 million. Management forecast gross margin to be between flat and up 50 basis points sequentially.

Acknowledging its weaker-than-expected guidance, management is optimistic about longer-term prospects.

"While near-term market demand has weakened in handsets," said Qorvo CEO Bob Bruggeworth, "our longer-term outlook has improved on recent developments with mid/high-band PADs [power-amplifier duplexers], Phase 6 design wins, and cellular IoT [Internet of Things] and other connectivity applications."

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Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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