What Happened?
Shares of communications chips maker Qorvo (NASDAQ: QRVO) jumped 2.3% in the afternoon session after the stock's positive momentum continued as it announced a merger with Skyworks Solutions in a deal valued at approximately $22 billion and released strong preliminary second-quarter results. The combination of the two companies created a U.S.-based global leader in high-performance radio frequency (RF) chips, which are used in smartphones for companies like Apple. Adding to the positive momentum, Qorvo also posted preliminary second-quarter revenue of $1.1 billion and non-GAAP diluted earnings per share of $2.22. The news prompted favorable reactions from analysts. Citigroup upgraded the stock's rating from "Sell" to "Neutral" and significantly raised its price target by 50% to $105. UBS also adjusted its price target on the stock upward to $108 from $100.
After the initial pop the shares cooled down to $99.00, up 1.6% from previous close.
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What Is The Market Telling Us
Qorvo’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock gained 11.2% on the news that the company reported preliminary second-quarter financial results that topped expectations and announced it had agreed to merge with rival chipmaker Skyworks Solutions in a deal valued at approximately $22 billion. The strong earnings report showed revenue of about $1.06 billion and non-GAAP diluted earnings per share of $2.22, both of which surpassed the company's prior guidance. Alongside the positive results, Qorvo announced the definitive agreement to combine with Skyworks. The cash-and-stock transaction meant Qorvo shareholders would receive $32.50 in cash and 0.960 of a Skyworks share for each share held. This merger was intended to form a U.S.-based leader in high-performance radio frequency, analog, and mixed-signal semiconductors.
Qorvo is up 41.9% since the beginning of the year, and at $99.00 per share, it is trading close to its 52-week high of $100.48 from October 2024. Investors who bought $1,000 worth of Qorvo’s shares 5 years ago would now be looking at an investment worth $763.20.
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