2 Apple Suppliers Slapped With Price-Target Cuts

ADI and QRVO hit new lows yesterday after Apple slashed its revenue forecast

Jan 4, 2019 at 11:22 AM
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Apple (AAPL) suppliers took a hit yesterday, after the iPhone maker cut its revenue guidance. The downside had analysts scrambling to readjust ratings on several names, with semiconductor names Analog Devices, Inc. (NASDAQ:ADI) and Qorvo Inc (NASDAQ:QRVO) in particular seeing bearish brokerage attention overnight.

Most Analysts Call Analog Devices Stock a "Buy"

RBC downgraded Analog Devices to "sector perform" from "outperform," and slashed its price target to $92 from $105, saying weaker demand trends and U.S.-China trade uncertainty will likely create headwinds for semiconductor stocks this year. BofA-Merrill Lynch chimed in, too, lowering its rating on ADI to "neutral" from "buy," and cutting its target price to $96 from $112.

Even with these bear notes, though, the majority of the analysts covering ADI maintain a "buy" rating, with not a single "sell" on the books. Plus, the average 12-month price target of $100.33 is a 23% premium to the stock's current perch.

It's been a more volatile-than-usual stretch for Analog Devices, per the stock's 60-day historical volatility of 38.2% -- in the 100th annual percentile. Recent price action has been to the downside, though, with ADI off 14.4% since unsuccessful tests of its 120-day and 200-day trendlines in early December. In the first three trading days of 2019, the equity has racked up a 5% deficit, though it's trading up 1.2% today at $81.70.

adi stock daily price chart jan 4

Qorvo Stock Bounces Back After Panning New Lows

J.P. Morgan Securities cut its Qorvo price target to $80 from $98, with the analyst in coverage pointing to weaker smartphone demand. UBS also downwardly adjusted its price target on QRVO, to $63 from $68.

The stock is trading up 5.1% today at $58.47, but this could be more of a dead-cat bounce, given Qorvo's long-term technical troubles. Specifically, the shares have lost 31.4% since topping out near $86.50 in early August, and tagged a two-year low of $54.74 during yesterday's Apple-related drop.

 qrvo stock chart

Against this backdrop, the majority of analysts covering Qorvo maintain a "hold" or "sell" suggestion. However, the average 12-month price target of $71.62 is a roughly 21% premium to current trading levels. This puts QRVO at risk of additional price-target cuts, should the tech stock resume its downtrend.


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