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Why Qorvo Stock Fell Sharply on Thursday

By Daniel Sparks – Nov 4, 2021 at 3:36PM

Key Points

  • Investors are likely disappointed in Qorvo's weak guidance for the holiday quarter.
  • Supply chain challenges are expected to weigh on fiscal Q3 results.
  • Management expects these challenges to moderate early next year.

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Shares are trading lower despite the company reporting better-than-expected fiscal Q2 revenue and earnings per share.

What happened

Shares of Qorvo (QRVO -0.08%) were pummeled on Thursday. As of 3 p.m. EDT, the stock was down about 14%.

The tech stock's decline follows the mobile phone semiconductor company's earnings report, which was released after market close on Wednesday. Though the company beat analysts' average forecast for fiscal second-quarter revenue and earnings per share, its outlook was disappointing.

A chart showing a stock price falling sharply.

Image source: Getty Images.

So what

Qorvo's revenue increased from $1.11 billion in the year-ago quarter to $1.26 billion. Analysts, on average, were expecting revenue of $2.25 billion. Earnings per share increased by $0.59 over last year to $3.42, crushing a consensus forecast for $3.25.

But supply challenges and "other factors impacting global smartphone demand," mean that the company is expecting revenue during the holiday quarter to decline sequentially, said Qorvo chief financial officer Mark Murphy in the company's fiscal second-quarter earnings release.

Management guided for fiscal third-quarter revenue between $1.09 billion and $1.12 billion. Analysts, on average, were expecting fiscal Q3 revenue of $1.25 billion.

No what

Fortunately, Murphy implied that these challenges may be transitory in nature. "In the March quarter, we expect these challenges to moderate," he said. Of course, moderated headwinds do not mean the headwinds will no longer exist. Investors, therefore, will want to keep an eye on the challenges the company is facing to see when Qorvo may be able to fully work through them.

Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool owns shares of and recommends Qorvo. The Motley Fool has a disclosure policy.

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