Qorvo 's stock is set to slow as the company's sales growth normalizes following the initial rollout of 5G phones, according to Bank of America. Qorvo reported better-than-expected results Wednesday for its fiscal second quarter, but its forward revenue guidance came in below expectations. Bank of America analyst Vivek Arya downgraded the stock to neutral from buy, saying in a note to clients Thursday that the chipmaker's sales growth is on track to slow significantly. Bank of America slashed its price target on Qorvo to $190 per share from $225 per share, implying an upside of 6.7% from where the stock closed Wednesday. Shares dropped more than 13% on Thursday. "We like QRVO's execution amidst a challenging supply environment and its moves to diversify away from smartphones. However, we forecast YoY sales growth decelerating to 11%/5% in CY22E/23E vs. 22% YoY in CY21E, which coupled with near-record margins suggest to us a more muted growth trajectory in the near to medium term," the analyst said. The company saw a boost from the rollout of 5G in the recent years, but the adoption cycle is slowing, which could hurt Qorvo even as the smartphone market strengthens in the year ahead. "Even as demand rebounds, 5G conversion is nearing ~40% (CY21E), likely to create difficult comps in QRVO's key Mobile Products segment (~75% of sales). Notably, we see growth becoming more reliant on unit gains, typically flattish in a mature handset market," the note said. —CNBC's Michael Bloom contributed to this report.
Sefa Ozel | E+ | Getty Images
Qorvo's stock is set to slow as the company's sales growth normalizes following the initial rollout of 5G phones, according to Bank of America.