What happened
Shares of radio-frequency company Qorvo (QRVO 0.69%) 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.
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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."
