Last Update 09 Jan 26

Fair value Decreased 0.82%

QRVO: Merger Synergies Will Support Higher Margins Despite Handset Demand Risks

Our Qorvo fair value estimate is now US$100.94 per share, down slightly from US$101.78, as analysts factor in merger related valuation synergies along with regulatory and handset demand risks highlighted in recent research.

Analyst Commentary

Recent Street research around the proposed Skyworks and Qorvo merger has shifted heavily toward a wait and see stance, with several firms moving Qorvo to more neutral ratings while highlighting both potential upside from consolidation and meaningful execution and regulatory risks.

Bullish Takeaways

Bullish analysts see the merger with Skyworks as creating "valuation synergies," which they factor into higher price targets for both companies. This supports the idea that combined earnings power could justify a higher equity value over time.
Some bullish analysts argue that bringing together Qorvo's radio frequency technologies with Skyworks' execution track record could support better pricing and margin expansion for the combined business. They view this as supportive for long term profitability.
Supporters of the deal highlight that the radio frequency industry has a heavy dependency on Apple and intense competition. They view consolidation as a way to reduce fragmentation and potentially improve industry structure.
A few bullish analysts indicate that the merger terms, including implied take out levels for Qorvo, are already informing their target prices. This suggests they see a path for investors to be compensated for waiting on deal completion, subject to regulatory outcomes.

Bearish Takeaways

Bearish analysts repeatedly flag regulatory approval as a key concern, including specific mention of China approvals. They treat this as an overhang on both valuation and timing of any merger related benefits.
There is caution around handset and iPhone demand, with expectations for a 7% decline in 2026 iPhone units after a better 2025, and concerns that a high priced foldable iPhone could slow upgrade cycles, which could weigh on Qorvo's radio frequency exposure.
Some bearish analysts point to Qorvo trading close to its implied take out price, arguing that upside may be capped in the near term if deal risk remains and if cost synergies or growth benefits take time to materialize.
Concerns are also raised about Skyworks' standalone market share at Apple and broader China headwinds into 2026, with skeptics questioning how much of the expected US$500m of annual cost synergies will ultimately reach Qorvo shareholders if demand pressure persists.

What's in the News

Skyworks Solutions entered into an Agreement and Plan of Merger to acquire Qorvo for approximately US$10b, with Qorvo shareholders set to receive US$32.50 in cash plus 0.960 Skyworks share for each Qorvo share held. The deal is targeted to close in early calendar 2027, subject to regulatory and shareholder approvals (Key Developments).
Prior to the formal merger announcement, Skyworks Solutions held talks in recent months to buy Qorvo, according to reporting that cited people familiar with the matter (The Information).
Qorvo provided earnings guidance for the quarter ending December 2025, expecting revenue of US$985m, plus or minus US$50m (Key Developments).
Qorvo reported that from June 29, 2025 to September 27, 2025 it repurchased 729,000 shares for US$65.12m, completing a total of 12,424,000 shares repurchased for US$1,167.16m under a buyback program announced on November 2, 2022 (Key Developments).
Qorvo scheduled a special or extraordinary shareholders meeting for February 11, 2026, which is expected to be relevant for the proposed Skyworks merger process (Key Developments).

Valuation Changes

The fair value estimate has edged down slightly to US$100.94 per share from US$101.78 per share.
The discount rate has risen slightly to 11.44% from 11.22%, reflecting a modestly higher required return in the model.
The revenue growth assumption is effectively unchanged at about 4.20%.
The net profit margin assumption is effectively unchanged at about 12.40%.
The future P/E multiple has moved slightly lower to 24.21x from 24.26x.

5G/6G adoption and growing IoT device proliferation are driving multi-year revenue growth and diversification, reducing reliance on cyclical markets.
Operational streamlining and expanding opportunities in defense and advanced wireless infrastructure are supporting sustained margin improvement and long-term growth.
Heavy dependence on a single customer, execution risks in diversification, and external pressures elevate revenue volatility and jeopardize margin improvement initiatives.

Catalysts

About Qorvo

Engages in development and commercialization of technologies and products for wireless, wired, and power markets in the United States, China, rest of Asia, Taiwan, and Europe.What are the underlying business or industry changes driving this perspective?

Qorvo is set to benefit from accelerating adoption and content expansion tied to the rollout of 5G and future 6G networks, as evidenced by strong design wins in flagship smartphones, Wi-Fi 7/8 deployments, and persistent efforts to increase RF content per device-directly supporting multi-year revenue growth and margin expansion.
The proliferation of connected devices in automotive, industrial, and consumer IoT-shown by new automotive ultra-wideband wins, AR/VR design victories, and enterprise network content gains-positions Qorvo to capture growing semiconductor demand and diversify revenue streams, reducing dependence on cyclical end-markets and smoothing earnings.
Material improvements in operational efficiency-such as the exit from legacy low-margin Android businesses, consolidation of manufacturing footprint (closure of North Carolina and Costa Rica sites), and product portfolio rationalization-are projected to drive sustainable cost savings and support higher operating margins starting late fiscal '27.
Increasing defense and aerospace opportunities, supported by rising US and allied spending as well as Qorvo's technological breadth and onshore manufacturing, are expanding the company's addressable market in margin-accretive segments, further boosting both revenue and net margins.
Rising data consumption and demand for advanced wireless infrastructure-evident in momentum around DOCSIS 4.0, massive MIMO, and LEO satellite programs-are creating durable growth opportunities for Qorvo's RF solutions, underpinned by ongoing digital transformation trends that strengthen top-line prospects.

Qorvo Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Qorvo's revenue will grow by 4.4% annually over the next 3 years.
Analysts assume that profit margins will increase from 2.2% today to 11.6% in 3 years time.
Analysts expect earnings to reach $480.9 million (and earnings per share of $5.04) by about September 2028, up from $80.8 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $603.6 million in earnings, and the most bearish expecting $234.2 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 24.0x on those 2028 earnings, down from 104.2x today. This future PE is lower than the current PE for the US Semiconductor industry at 30.1x.
Analysts expect the number of shares outstanding to decline by 1.98% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 10.85%, as per the Simply Wall St company report.

Qorvo Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Heavy reliance on a single large customer-representing 41% of revenue this quarter-exposes Qorvo to significant revenue concentration risk; any slowing demand, loss, or change in supplier relationships with this customer could cause material volatility in revenue and earnings.
Execution risk is present in Qorvo's diversification strategy, as delayed ramps in new growth segments (e.g., automotive ultra-wideband SoCs pushed to fiscal '27, CSG segment revenue underperforming previous outlooks) may result in slower or more limited revenue growth than anticipated from those markets.
The ongoing exit from low-margin mass-tier Android 5G, coupled with declining China-based Android revenue (down 29% year-over-year and projected to trend lower), introduces significant headwinds and potential near-term gaps in revenue, increasing risk of net margin compression if higher-margin segments don't scale sufficiently.
Heightened trade tensions, tariffs, and global regulatory uncertainty, especially regarding China and tariff policy, have already caused some customer demand buffering and production delays; these geopolitical factors could continue to disrupt international sales, increase compliance costs, and squeeze operating margins.
Consolidation of manufacturing (closure of Costa Rica and North Carolina sites, relocation of SAW filter production) introduces operational risk, execution complexity, and upfront costs-any failure to achieve anticipated cost savings or production stability may impair projected improvements in gross and net margins.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $97.286 for Qorvo based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $128.0, and the most bearish reporting a price target of just $70.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $4.1 billion, earnings will come to $480.9 million, and it would be trading on a PE ratio of 24.0x, assuming you use a discount rate of 10.8%.
Given the current share price of $90.88, the analyst price target of $97.29 is 6.6% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Merger Will Drive Industry Consolidation Amid Regulatory And Demand Uncertainty