Investment bank Morgan Stanley (MS) backed the U.S.-based chipmaker Qorvo (QRVO) after activist hedge fund Starboard Value acquired a stake last week. Morgan Stanley analyst Joseph Moore upgraded QRVO stock from Hold to Buy, raising the price target from $90 to $106. The new target indicates a potential upside of over 20% in the share price. Qorvo shares jumped 4% after the upgrade, taking their year-to-date gain to over 25%.
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Morgan Stanley Bullish on Starboard Stake
Moore highlighted that the involvement of Starboard could signal a fresh trajectory for Qorvo’s earnings recovery. He further emphasized that considering Starboard’s successful history with semiconductor companies and its past involvement with Qorvo, there’s potential to create substantial value through a strategic shift in the company’s direction.
In a regulatory filing last week, Qorvo disclosed that Starboard holds 7.29 million shares, representing a 7.7% stake in the company.
Notably, Starboard Value, led by Jeffrey Smith, is known for advocating change at companies like Pfizer (PFE), Rupert Murdoch’s News Corp (NWSA), and business software giant Salesforce (CRM).
Morgan Stanley Predicts Earnings Growth
Morgan Stanley predicts that Qorvo’s EPS will reach $9.63 if the company focuses on its core radio frequency technology expertise, rather than pursuing its previous diversification strategy.
Moore suggested that the company could also enhance its earnings by aligning its expenses in its core radio frequency business. Additionally, Moore believes there’s potential for Qorvo to grow its revenue, however, his expectation of increased EPS is not based on overly optimistic assumptions about the company’s revenue growth.
Moore’s Ranking on TipRanks
Moore is a five-star-rated analyst on TipRanks, ranking 355 out of over 9,200 analysts. With a 57% success rate, he has delivered an average return of 13.4% per rating.
TipRanks ranks financial experts by success rate, average return, and statistical significance, helping users monitor top analysts’ performance on stocks to uncover new investment opportunities.
Is Qorvo a Good Stock to Buy?
As per the consensus rating on TipRanks, QRVO stock has a Hold rating, supported by a total of 19 recommendations. It includes 15 Holds, two Buys, and two Sells. The Qorvo share forecast is $85.07, which is 3% below the current price level.
