Jan. 13, 2022 7:20 AM ET
Qorvo, Inc. (QRVO)QCOM
By: Chris Ciaccia, SA News Editor5 Comments

Qorvo (NASDAQ:QRVO) is getting slapped with a downgrade from Oppenheimer, as the investment firm notes the semiconductor company has realized the gains from 5G as fast as it thought it would and it has high exposure to handsets, a mature market.

Analyst Rick Schafer lowered his rating to perform from outperform and removed his $220 price target, noting that handsets may be a big market, but it's also mature and component suppliers need to keep adding content inside the phones to show growth.

"In 2022, we see limited content gains for [Qorvo] at iPhone and increased competition from [Qualcomm] (NASDAQ:QCOM) in China Android," Schafer wrote in a note to clients. "We see opportunities at Samsung though believe any content gains are likely insufficient to drive outsized growth/upside. With limited obvious growth/upside catalysts near term, we're stepping to the sidelines."

Qorvo (QRVO) shares are down more than 1.5% to $150.39 in pre-market trading. Over the past year, Qorvo shares have lost 15%.

Schafer noted that 5G penetration is expected to surpass 50% this year, but Samsung and China Android devices are the areas where it can grow, but Qorvo (QRVO) faces "increased competition" from the aforementioned Qualcomm (QCOM) for its antenna-RF-baseband package offering.

Separately, there is also concern that Qorvo's (QRVO) management guided the mobile segment down 17% quarter-over-quarter in the third-quarter, $135 million below the original expectation. Of that $135 million, $100 million came from supply constraints and $35 million was from weaker Android in China.

Other concerns are the company's gross margins, which peaked at 54.4% in the fourth-quarter and are hovering near 52%. The company may restart its Farmers Branch fab, which is costing $3 million per quarter to maintain.

Last month, Qorvo (QRVO) proposed it would sell additional debt for general corporate purposes, though the size of the offering has yet to be disclosed.