One of the best 5G stocks to watch this earnings season

The 5G smartphone market is set to explode in 2021. Apple Vendor Murata estimates that 5G smartphone sales could exceed 500 million units in the new year, up from 300 million units in 2020. Market research firm Strategy Analytics has a more aggressive forecast – predicting a 150% jump in 5G smartphone sales this year from 2020. Shipments estimated at 250 million units.

Qorvo (NASDAQ: QRVO) offers investors a way to profit from this huge increase in sales of 5G smartphones. The chipmaker supplies radio frequency chips to several major smartphone manufacturers (original equipment manufacturers). Unsurprisingly, Qorvo’s revenue and profits have accelerated a lot lately – a trend that is expected to continue when the chipmaker releases its third quarter fiscal 2021 results on February 3. Here’s what to expect.

Qorvo is about to generate big wins again

Analysts expect Qorvo to generate non-GAAP earnings of $ 2.66 per share on revenue of $ 1.06 billion for the December quarter. These estimates are in line with management’s expectations and well ahead of $ 1.86 in earnings per share and $ 869 million in revenue for the period last year.

But don’t be surprised if the company exceeds its own expectations. Indeed, Apple, which is believed to account for a third of Qorvo’s sales, potentially increased iPhone production in the last calendar quarter of 2020. Supply chain checks carried out by Wedbush Securities analyst Daniel Ives , suggest that Apple could have built nearly 90 million iPhones in the fourth quarter, up from its initial estimate of 65 million to 70 million units in September 2020.

Such an impressive jump in iPhone production during the quarter does not seem surprising as demand for the iPhone 12 is so high. After all, it didn’t take long for the device to become the best-selling 5G smartphone in the world, so Apple alone could give Qorvo a big boost and help it beat Wall Street estimates. when the company releases its results this week.

The party has only just begun

Analysts believe that Qorvo will be able to maintain its high growth rate with 19% year-over-year growth in the fiscal fourth quarter, while profits will rise 27% to $ 2.00 per share.

However, it is quite possible that Qorvo exceeds these estimates. Cowen Analysts estimate Apple could increase its March quarter iPhone builds to 55 million units, up 49% year-over-year. Wedbush has an even more aggressive forecast, estimating that the iPhone will build between 60 million and 70 million units in the current quarter. Additionally, momentum is expected to spread into the second quarter of the calendar year, and Apple is expected to manufacture at least 40 million iPhone units.

All of this bodes well for Qorvo given his close relationship with the tech giant. However, the chipmaker is sitting on additional growth engines such as SamsungThe flagship of the recently launched Galaxy S21. Qorvo has been a long-time supplier of RF chips for Samsung’s Galaxy line of smartphones, including Galaxy S20 devices last year, and it’s likely to have retained its place in the new version.

That’s because Samsung’s Galaxy S21 Ultra is equipped with 6E WiFi connectivity, and Qorvo said in its last call for results that it “actively supports major OEMs in the design of 6E platforms.” Counterpoint Research estimates that shipments of the Galaxy S21 could surpass those of the Galaxy S20 by the middle of this year. That wouldn’t be surprising, as Samsung cut base prices for the Galaxy S21 models by $ 200 compared to the previous S20 line.

Qorvo can benefit from the success of its mobile customers and maintain its impressive growth rate. More importantly, investors should remember that the 5G smartphone market still has a lot of growth to offer, as shipments could reach 1.5 billion units by 2025. In this environment, Qorvo can remain one of the best 5G games in the long run, and a strong performance in the upcoming earnings report should give investors the right impetus to buy the stock.