Shares of Qorvo (QRVO) jumped over 7% in after-hours trading yesterday on news of activist Starboard Value’s 7.7% stake build. Qorvo is an American chip-making company that is focused on producing radio frequency chips for smartphone, infrastructure, and defense companies. Jeff Smith-led Starboard is expected to officially disclose its stake in a regulatory filing today.
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The Wall Street Journal was the first to report this news, citing people familiar with the matter. The report states that Starboard is seeking to turnaround Qorvo to improve its share price performance. Although the exact details of Starboard’s stake remain unclear, the report notes that the activist hedge fund has invested roughly $500 million in Qorvo. QRVO shares have lost 26.3% in the past year.
Learning Facts About Qorvo and Starboard Value
Starboard is known to take stakes in technology and semiconductor companies. The hedge fund even had a stake in Qorvo’s predecessor company, TriQuint Semiconductor, wherein Starboard pushed for board changes and nominated directors. Qorvo was formed in 2014 through a merger of TriQuint and RF Micro Devices.
The intent of Starboard Value’s huge stake in Qorvo remains unknown at the moment. In fact, Qorvo is facing several headwinds of its own, including growing expenses, stiff competition, and a financial outlook that is failing to meet the Street’s expectations. Qorvo is said to be undertaking measures such as factory consolidation to cut down on some of the expenses.
Having said that, Qorvo’s chips have little connection to the booming AI (artificial intelligence) industry, which is why its shares have not rallied in the past year, unlike the stocks of many AI companies. Starboard could seek to unlock Qorvo’s manufacturing efficiencies and could drive its ambitions toward AI.
Interestingly, some of Qorvo’s competitors include big names such as Qualcomm (QCOM), Broadcom (AVGO), and Skyworks Solutions (SWKS). These companies compete in manufacturing radio frequency chips for communication industries and energy companies. Meanwhile, some of Starboard Value’s latest stakes are in Pfizer (PFE), Kenvue (KVUE), and Riot Platforms (RIOT).
Is QRVO a Good Stock to Buy?
Analysts prefer to remain on the sidelines on Qorvo stock owing to the challenges discussed above. On TipRanks, QRVO stock has a Hold consensus rating based on two Buys, 15 Holds, and two Sell ratings. Also, the average Qorvo price target of $85.73 implies 16.5% upside potential from current levels.
