QRVO fell 6.1%
Shares of semiconductor company Qorvo (QRVO) fell 6.1% on May 17 to close trading at $63.93. The stock is currently trading 16.8% above its 52-week low of $54.74 and 26% below its 52-week high of $86.50.
The US Bureau of Industry and Security recently barred domestic companies from conducting business with Chinese (FXI) tech heavyweight Huawei. Huawei has listed Qorvo as a core supplier.
China is Qorvo’s largest market in terms of sales. Though Qorvo’s revenue in China fell 18.1% in fiscal 2019 (which ended in March), it still accounted for 52% of total sales. The recent escalation of the trade war between the United States and China has sent Qorvo stock spiraling down 15.5% so far in May.
Qorvo stock has generated a return of 5.3% since the start of 2019 despite its recent pullback. The stock has fallen 21% in the last 12 months. It has risen 8.1% annually in the last three years and has underperformed the VanEck Vectors Semiconductor ETF (SMH), which has gained 24% in the same period.
Is the stock undervalued after its recent pullback?
Qorvo stock is trading at a forward PE multiple of 9.5x. In comparison, its EPS are expected to rise 3.3% in 2020 and 12.9% in 2021. Its earnings are expected to rise at a compound annual growth rate of 11.4% in the next five years.
Qorvo stock looks undervalued considering its 2021 earnings growth. Analysts expect its sales to grow 5.8% annually over the next three years.
Qorvo stock is trading at a significant discount to the average estimate
Of the 24 analysts tracking Qorvo, eight have given it “buys,” and 15 have given it “holds.” There is one “sell” recommendation on the stock. Analysts have given it an average 12-month target price of $81.75, which indicates that it’s trading at a discount of 28% to analysts’ average estimate.