Qorvo Inc. QRVO intends to exhibit its innovative radio frequency (“RF”) products at the Consumer Electronics Show (“CES”) 2019 in Las Vegas. These products are primarily designed for connected car systems, smart homes, drones, and services supporting the Internet of Things (IoT).
The latest solutions support Bluetooth and BLE, Wi-Fi, Zigbee, LTE and Cellular/NB-IoT which are not only compact in size but will also aid in extending the battery life of portable products. Notably, these RF chips will keep a check on the heat emitted from the devices while enhancing efficiency. It will also solve connectivity and reliability challenges.
We believe Qorvo is poised to gain traction with these new RF Technologies as these comply with the designer’s product criteria of a compact form, enhanced efficiency and robust interference mitigation and cost efficiency. Further, these new products are reinforcing the company’s product portfolio.
Market Growth Prospects
IoT devices have been gaining significant traction in recent times. According to Statista, the number of connected IoT devices will reach 31 billion by 2020. The Consumer Technology Association (“CTA”) estimates the connected home market to grow by more than 40% this year.
Analyst firm IDC expects worldwide IoT spending to witness a CAGR of 13.6% over the next five years to reach a total of $1.2 trillion in 2022. Per IOT Analytics, the number of active IoT devices is expected to grow from 7 billion in 2018 to 10 billion by 2020 and 22 billion by 2025, including devices on the consumer and enterprise side.
Qorvo is well poised to cater to growing needs in this domain on the back of its robust product portfolio, strengthening IoT capabilities and key offerings.
Expanding Product Portfolio: A Key Catalyst
We believe Qorvo is well poised to gain from solid demand of its performance-tier for RF Fusion based solutions. It will also benefit from antenna tuning, discrete components and Bulk Acoustic Wave (“BAW”) based multiplexers.
The company’s cellular RF and WiFi solutions find significant adoption in a variety of mobile devices, including smartphones, notebook computers, wearables, tablets, and cellular-based applications.
Moreover, robust adoption of the company’s solutions in defense (advanced radars and other electronic warfare products) and connectivity (Wi-Fi and emerging IoT applications) is noteworthy.
Qorvo’s partnership with LEEDARSON is also worth mentioning in this regard. The collaboration is aimed at delivering IoT standard solutions by offering a range of smart home lighting solutions combining Zigbee 3.0 with Bluetooth Low Energy (“BLE”) 5.0 protocols..
Qorvo had unveiled QPG6095 system-on-chip (SoC) controller integrated with new LEEDARSON smart light bulb and light switch solution to enhance smart home communications systems for ultra-low-power wireless applications.
Further, Qorvo was selected by Samsung to supply 3.5 GHz 5G FEM, supporting multiple 5G mobile device samples. The company also started shipping RF Fusion Phase 6 for Vivo's NEX flagship smartphone.
The company is well-positioned to capitalize on the industry's biggest growth opportunities by leveraging its diversified product portfolio, systems-level expertise, R&D and manufacturing scale, and internal assembly and test capabilities.
However, customer concentration, particularly from Apple AAPL and Huawei remains a significant headwind for Qorvo.
Zacks Rank & Key Picks
Qorvo carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology sector are Upland Software UPLD and Marvell Technology Group Ltd. MRVL, both flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Upland Software and Marvell is currently pegged at 20% and 9.4%, respectively.
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