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Qorvo: Market Expectations Remain At Unrealistically Elevated Levels For Free Cash Flow

Apr. 04, 2022 7:06 PM ETQorvo, Inc. (QRVO)4 Comments
Karreta Advisors profile picture
Karreta Advisors


  • Our analysis highlights continued unrealistic market expectations for Qorvo's free cash flow generation in FY3/2023, signaling further downside risk.
  • Qorvo is facing an unavoidable increase in its income tax liability with the effectiveness of its tax shield now expiring.
  • Consensus forecasts depict a decelerating growth profile for the next two years. We stick with our sell rating.

Smartphone in male hand on background of cell towers

Oleg Elkov/iStock via Getty Images

Investment thesis

Qorvo's (NASDAQ:QRVO) shares have seen a 28% drawdown over the last 6 months, but our revisit highlights unrealistic market expectations for free cash flow generation into FY3/2023. The risk of normalizing tax rates remains

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Karreta Advisors profile picture
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Comments (4)

Without any doubt, the nature of supply chain difficulties is temporary, hence long term working capital requirements are at a different level than these days. Meanwhile you are writing a bearish research at a valuation of PER 10. Good luck explaining your clients later on.
Recycling the same article
This doesn't even close to a valid analysis of the company and its prospects. Recent drawback is due to concerns over Chinese phone makers and renewed Covid lockdowns.
Dean Grossmith profile picture
@Karreta Advisors whilst I share some of the concerns you express here, why do you think 5G is not going to continue to provide growth? I'd certainly like to see more detailed analysis around 5G growth (or lack of it) to justify it as a sell rating. I was under the impression that Qorvo operates at the premium end of the market and that MediaTek is at the budget end of the market.
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