Here's What Makes Qorvo (QRVO) a Promising Portfolio Pick
Shares of Qorvo Inc. QRVO have jumped 8.9% post second-quarter fiscal 2024 earnings release, driven by a solid performance. Earnings estimates for the current and next fiscal year have increased 31.4% each since February 2023, implying robust inherent growth potential. With healthy fundamentals, this Zacks Rank #2 (Buy) stock appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Growth Drivers
Headquartered in Greensboro, NC, Qorvo is a leading provider of core technologies and radio frequency (RF) solutions for diverse applications. The company is expanding its opportunities across markets, customers and product categories while maintaining its commitment to technology leadership and productivity gains. Qorvo offers a complete product portfolio, targeting the highest growth segments of its market, including filters, switches and tuners.
The company reported relatively healthy second-quarter fiscal 2024 results, with the top and bottom lines surpassing the respective Zacks Consensus Estimate. Qorvo is well-positioned to win some of the industry's highest growth opportunities by leveraging its diversified product portfolio, systems-level expertise, R&D and manufacturing scale and internal assembly and test capabilities. With a broad product portfolio, the company is likely to create new growth opportunities in three large global markets, namely, mobile devices, network infrastructure and aerospace/defense.
Qorvo has introduced highly integrated front-end solutions that simplify and accelerate the implementation of multimode, multi-band 4G smartphones and tablets. These new RF Fusion front-end solutions showcase the company's ability to help leading OEMs quickly launch their next-generation flagship devices. Qorvo's RF Flex solutions have been selected to support multiple upcoming leading 4G reference designs. RF Flex delivers best-in-class current consumption to enable superior device performance and leading-edge design flexibility to simplify regional customization.
Accelerating timeline for 5G deployment bodes well for Qorvo. In smartphones, it has secured design wins for premium 5G devices. The reference designs combine MediaTek chipsets and SoCs with Qorvo’s RF front-end solutions for superior throughput, low latency, high power efficiency and range.
The design wins within the automotive sector are likely to facilitate improved 5G connectivity with support for enhanced safety and entertainment features. These include telematics, advanced driver-assistance systems, autonomous driving, emergency calling and in-vehicle connectivity and entertainment services. The company also secured Wi-Fi 6, Wi-Fi 6E and Wi-Fi 7 design wins in a range of devices, including service provider gateways and smartphones.
It has a long-term earnings growth expectation of 10% and delivered a solid earnings surprise of 73.9%, on average, in the trailing four quarters.
Other Key Picks
Arista Networks, Inc. ANET, carrying a Zacks Rank #2, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 19.8% and delivered an earnings surprise of 12%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
United States Cellular Corporation USM, sporting a Zacks Rank #1, is the fourth largest full-service wireless carrier in the United States. The company provides a range of wireless products and services, and a high-quality network to increase the competitiveness of local businesses and improve the efficiency of government operations.
U.S. Cellular has taken concrete steps to accelerate subscriber additions and improve churn management. The company aims to offer the best wireless experience to customers by providing superior quality network and national coverage. It is well-positioned to support the investment required for network enhancements, including the deployment of 5G technology. The company is well-positioned for continued demand for broadband.
Comtech Telecommunications Corp. CMTL, carrying a Zacks Rank #2, is another solid pick. Headquartered in Melville, NY, the company is a leading global provider of next-generation 911 emergency systems and secure wireless communications technologies to commercial and government customers.
Comtech’s key satellite earth station modems incorporate forward error correction and bandwidth compression technologies, which enable its customers to optimize their satellite networks by either reducing their satellite transponder lease costs or increasing data.
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