Morgan Stanley has reduced its price target on Qorvo Inc. to $84 from $110 and retained an Equalweight rating on the semiconductor company’s shares. Market-data from InvestingPro shows Qorvo trading at $82.81, indicating the stock is trading below InvestingPro’s Fair Value estimate.
The analyst action follows a quarter in which Qorvo posted stronger-than-expected results but signaled growing near-term challenges in its mobile franchise. Management reported a solid third-quarter performance for fiscal 2026, including an earnings per share (EPS) of $2.17 versus the consensus of $1.86, and revenue of $993 million compared with an expected $988.69 million. These outcomes reflect a quarter that beat Wall Street estimates on both the top and bottom lines.
Despite the favorable headline numbers, Morgan Stanley pointed to mounting pressure within Qorvo’s Advanced Cellular Group (ACG). The firm flagged accelerating downside in the mobile business driven by two factors called out by company management: share loss in certain upcoming iPhone models and a faster-than-expected exit from lower-tier Android devices. Those dynamics are weighing on the revenue outlook, producing a materially softer fiscal year 2027 revenue trajectory than was previously anticipated.
Management has said Qorvo is accelerating its withdrawal from the low-tier Android market. The company now expects a roughly $300 million revenue decline in fiscal 2027 associated with this exit, up from a $200 million reduction estimated last quarter. That accelerated decline is being driven by original equipment manufacturers (OEMs) pulling orders amid elevated memory pricing and constrained memory availability.
According to the company, memory shortages and higher memory costs are impacting lower-tier smartphones most acutely because memory represents a larger share of the bill of materials for these devices. OEMs are responding by prioritizing production and supply of flagship models; Qorvo’s management has not yet observed a material impact on the premium tier segment.
Operationally, Qorvo’s balance sheet metrics remain supportive. InvestingPro data shows a current ratio of 2.95, indicating that the company’s liquid assets comfortably exceed near-term liabilities. Qorvo carries a moderate level of leverage, reflected in a Debt/Equity ratio of 0.44, and an overall InvestingPro financial health score of 2.6, classified as "GOOD."
On margins, the company appears to be outperforming expectations, with margins improving faster than projected. However, those margin gains are being offset by the revenue headwinds in ACG, prompting Morgan Stanley to lower the firm’s valuation target even as the broker keeps a neutral stance on the shares.
Management activity on capital allocation provides a partial counterweight to the revenue concerns: the company has been an active buyer in the open market, repurchasing shares. Analysts cited in the InvestingPro dataset expect net income to grow this year, with EPS for fiscal year 2026 forecast at $6.47.
In sum, Qorvo enters fiscal 2027 with a mixed setup: a recent quarter that surpassed expectations and improving margin trends, but intensified revenue pressure stemming from product share shifts in the handset market and supply-side memory constraints that disproportionately affect lower-tier devices. Those dynamics underpin Morgan Stanley’s decision to narrow its upside case while maintaining a neutral recommendation on the stock.
Key points
- Morgan Stanley lowered Qorvo’s price target to $84 from $110 and kept an Equalweight rating.
- Qorvo beat Q3 fiscal 2026 estimates with EPS of $2.17 and revenue of $993 million, but faces growing mobile revenue headwinds.
- Supply-chain strains and elevated memory pricing are prompting OEMs to favor flagship models, hitting low-tier Android demand hardest; fiscal 2027 low-tier impact now forecast at -$300 million.
Risks and uncertainties
- Loss of share in upcoming iPhone models and a faster-than-expected exit from low-tier Android phones could materially reduce mobile revenue - impacting the semiconductor and smartphone handset supply chain sectors.
- Elevated memory prices and constrained availability may continue to suppress orders for lower-tier devices, creating further downside risk to Qorvo’s ACG revenue.
- While margins are improving, ongoing revenue declines could weaken overall profitability trends and pressure near-term guidance - affecting investor valuation of semiconductor firms exposed to handset demand.