QRVO
Qorvo, Inc.
$82.51
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 27.8% above fair value
You pay
$82.51
Bear
$47.32
Fair
$64.58
Bull
$81.84
Bear
$47.32
-42.6%
$3.62 × 12x + net cash
Fair
$64.58
-21.7%
$3.62 × 16x + net cash
Bull
$81.84
-0.8%
$3.62 × 20x + net cash
Key Value Driver
Through-cycle normalized EPS ($3.62)
Implied Market Multiple
22.8x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $88.86 from 42 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $64.58 per share.
Warnings
Price-to-book value of 8.4x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $88.86 (from 42 analysts). Our estimate is 39% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing