We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
2 Radio Frequency Stocks to Watch in a Challenging Industry
Read MoreHide Full Article
The Zacks Semiconductors - Radio Frequency industry is riding on rapid deployment of 5G networking, which is gaining importance from the rapid proliferation of Internet of Things (IoT), Advanced Driver Assistance Systems (ADAS) and Augmented Reality/Virtual Reality (AR/VR) devices.
Democratization of 5G smartphones is a tailwind for the industry players. This has bolstered demand for RF semiconductor products, which enhances the prospects of prominent industry players like Qorvo (QRVO - Free Report) and RF Industries (RFIL - Free Report) .
Nevertheless, lingering impacts of the coronavirus pandemic-led business volatility remain a concern.
Industry Description
The Zacks Semiconductors - Radio Frequency Industry comprises companies that provide Radio Frequency (RF) solutions, Front-end Modules (FEMs), low-noise amplifiers, diodes, multi-chip modules (MMICs), optical components, surface acoustic wave (SAW), bulk acoustic wave (BAW) technology-based antenna-plexers, and film bulk acoustic resonator (FBAR) filters to enable smartphone devices function more efficiently in congested RF spectrum. They serve a wide array of industries with their solutions finding ample application in 5G and smartphone equipment, aerospace and defense, optical networks, cellular base stations, automotive and smart home applications. Most of these companies utilize robust wafer fabrication technologies as well as ZigBee, Bluetooth Low Energy (BLE), Thread, silicon germanium and Gallium Nitride (GaN) technologies to stay ahead of competition.
4 Trends Influencing the Prospects of the Semiconductors - RF Industry
Accelerated Deployment of 5G is a Tailwind: Rapid implementation of 5G networking infrastructure and robust adoption of cloud computing applications hold promise considering the wireless communication market. Coronavirus crisis-induced work-from-home wave has necessitated the need for higher bandwidth and triggered LTE advancements, which are expected to bolster demand for RF power amplifiers. Increasing RF content in latest 5G smartphones is a key catalyst. For instance, the roll out of 5G-supported iPhone 12 line up is anticipated to benefit the top-line performance of Qorvo in the near term.
Rebound in Smartphone Market Favors Growth Prospects: Demand recovery in the smartphone market is likely to aid prospects of major industry players, including Qorvo, and RF Industries. 5G smartphone shipments are projected to account for more than 40% of global volume in 2021 and to subsequently grow to 69% in 2025. IDC estimates that growing competition in the 5G Android domain, specifically from Chinese vendors is anticipated to result in aggressively priced 5G smartphones. This is expected to accelerate the democratization of 5G smartphones and boost prospects of the industry players.
Innovation is Opening New Business Avenues: Easing shelter-in-place guidelines, as economies started to reopen, has led to growing clout of contact tracing applications in Ultra-Wideband (UWB) technology-based wearable devices. Increase in production ramp of such wearables is opening up new opportunities for industry participants. Rapid proliferation of IoT, wearables, drones, VR/AR devices, autonomous cars, and ADAS is expected to drive demand for RF semiconductor products beyond smartphone devices, which favors industry prospects. Notably, RF Semiconductors are setting the pace for technology modernization, consequently digitizing aspects like connectivity, healthcare, transport, defense, among others. For instance, Qorvo is gaining from rapid adoption of GaN for high-power defense applications and emerging healthcare applications. Diversified utilization of RF Semiconductor products bodes well for the industry players. Moreover, evolution of semiconductor manufacturing processes from 10 nanometer (nm) to 7 nm and even 5 nm and 3 nm technology is anticipated to bolster the industry’s prospects. Further, the roll out of new bands and band combinations has led to considerable design challenges for OEM smartphone manufacturers. The industry participants, like Qorvo, are looking to address these challenges with a robust range of antenna-plexers portfolio utilizing BAW technology.
Coronavirus Crisis Induced Macroeconomic Weakness to Hinder Prospects: The industry players are reeling under the impact of the coronavirus crisis-induced macroeconomic woes. The COVID-19 crisis led imposition of lockdowns had previously compelled semiconductor companies to shut down production facilities temporarily. The business impacts stemming from supply chain disruptions due to social distancing and shelter-in-place restrictions raises concerns regarding the industry’s prospects amid increasing infected cases. Although vaccination efforts have triggered gradual reopening of economies in several parts of the world, production delays remain an overhang. Moreover, the U.S.-China trade war induced tariffs and Huawei ban have been hindering growth of the industry participants for quite some time now. Markedly, the industry players generate significant portion of their revenues from China.
Zacks Industry Rank Indicates Dim Near-Term Prospects
The Zacks Semiconductors - Radio Frequency Industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #242, which places it at the bottom 5% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dim near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the bootm 50% of the Zacks-ranked industries is a result of negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are pessimistic about this group’s earnings growth potential. While the industry’s earnings estimate for 2021 has moved down 3.1% since Aug 31, 2020, the same for 2022 has declined 2.3%.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Lags S&P 500 & Sector
The Zacks Semiconductors - Radio Frequency Industry has underperformed the S&P 500 and its sector over the past year.
The industry has gained 3.7% over this period compared with the S&P 500’s and broader sector’s rally of 29.8% and 29.9%, respectively.
One Year Price Performance
Industry's Current Valuation
On the basis of forward 12-month price-to-earnings ratio (P/E), which is a commonly used multiple for valuing Semiconductors - Radio Frequency stocks, the industry is currently trading at 14.44X, lower than the S&P 500’s 21.96X and the sector’s 29.52X.
Over the past five years, the industry has traded as high as 24.12X and as low as 10.01X, with the median being at 14.21X, as the charts below show.
Strength in smartphone vertical, upgrades in 5G smartphones, and gains from consistent growth in 5G infrastructure, power management, and defense end-markets are anticipated to drive financial performance.
The rollout of Wi-Fi 6 and 6E technologies and the growing clout of precision location applications based on UWB technology favor the company’s prospects.
Solid uptake of BAW antenna-plexers is expected to boost top-line growth. The expanding portfolio of 5G base solutions amid accelerated deployment of 5G bodes well. Besides, the growing momentum for Qorvo’s GaN technology-based solutions is positive.
Shares of Qorvo have climbed 3.1% in the past year. The Zacks Consensus Estimate for the Greensboro, NC-based company’s fiscal 2022 earnings has stayed at $11.87 per share over 30 days, indicating year-over-year growth of 18.7%.
Price and Consensus: QRVO
RF Industries: This Zacks Rank #3 company is riding on strong demand for its Optiflex hybrid fiber solutions. Growing demand for wireless carrier infrastructure builds for 5G is a tailwind for RF Industries. Increased spending from carriers deploying 5G bodes for RFIL.
RF Industries shares have risen 11.4% in the past year. The Zacks Consensus Estimate for its fiscal 2022 bottom line is pegged at 42 cents per share, unchanged over the past month, suggesting 162.5% growth over fiscal 2021.
Price and Consensus: RFIL
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
2 Radio Frequency Stocks to Watch in a Challenging Industry
The Zacks Semiconductors - Radio Frequency industry is riding on rapid deployment of 5G networking, which is gaining importance from the rapid proliferation of Internet of Things (IoT), Advanced Driver Assistance Systems (ADAS) and Augmented Reality/Virtual Reality (AR/VR) devices.
Democratization of 5G smartphones is a tailwind for the industry players. This has bolstered demand for RF semiconductor products, which enhances the prospects of prominent industry players like Qorvo (QRVO - Free Report) and RF Industries (RFIL - Free Report) .
Nevertheless, lingering impacts of the coronavirus pandemic-led business volatility remain a concern.
Industry Description
The Zacks Semiconductors - Radio Frequency Industry comprises companies that provide Radio Frequency (RF) solutions, Front-end Modules (FEMs), low-noise amplifiers, diodes, multi-chip modules (MMICs), optical components, surface acoustic wave (SAW), bulk acoustic wave (BAW) technology-based antenna-plexers, and film bulk acoustic resonator (FBAR) filters to enable smartphone devices function more efficiently in congested RF spectrum. They serve a wide array of industries with their solutions finding ample application in 5G and smartphone equipment, aerospace and defense, optical networks, cellular base stations, automotive and smart home applications. Most of these companies utilize robust wafer fabrication technologies as well as ZigBee, Bluetooth Low Energy (BLE), Thread, silicon germanium and Gallium Nitride (GaN) technologies to stay ahead of competition.
4 Trends Influencing the Prospects of the Semiconductors - RF Industry
Accelerated Deployment of 5G is a Tailwind: Rapid implementation of 5G networking infrastructure and robust adoption of cloud computing applications hold promise considering the wireless communication market. Coronavirus crisis-induced work-from-home wave has necessitated the need for higher bandwidth and triggered LTE advancements, which are expected to bolster demand for RF power amplifiers. Increasing RF content in latest 5G smartphones is a key catalyst. For instance, the roll out of 5G-supported iPhone 12 line up is anticipated to benefit the top-line performance of Qorvo in the near term.
Rebound in Smartphone Market Favors Growth Prospects: Demand recovery in the smartphone market is likely to aid prospects of major industry players, including Qorvo, and RF Industries. 5G smartphone shipments are projected to account for more than 40% of global volume in 2021 and to subsequently grow to 69% in 2025. IDC estimates that growing competition in the 5G Android domain, specifically from Chinese vendors is anticipated to result in aggressively priced 5G smartphones. This is expected to accelerate the democratization of 5G smartphones and boost prospects of the industry players.
Innovation is Opening New Business Avenues: Easing shelter-in-place guidelines, as economies started to reopen, has led to growing clout of contact tracing applications in Ultra-Wideband (UWB) technology-based wearable devices. Increase in production ramp of such wearables is opening up new opportunities for industry participants. Rapid proliferation of IoT, wearables, drones, VR/AR devices, autonomous cars, and ADAS is expected to drive demand for RF semiconductor products beyond smartphone devices, which favors industry prospects. Notably, RF Semiconductors are setting the pace for technology modernization, consequently digitizing aspects like connectivity, healthcare, transport, defense, among others. For instance, Qorvo is gaining from rapid adoption of GaN for high-power defense applications and emerging healthcare applications. Diversified utilization of RF Semiconductor products bodes well for the industry players. Moreover, evolution of semiconductor manufacturing processes from 10 nanometer (nm) to 7 nm and even 5 nm and 3 nm technology is anticipated to bolster the industry’s prospects. Further, the roll out of new bands and band combinations has led to considerable design challenges for OEM smartphone manufacturers. The industry participants, like Qorvo, are looking to address these challenges with a robust range of antenna-plexers portfolio utilizing BAW technology.
Coronavirus Crisis Induced Macroeconomic Weakness to Hinder Prospects: The industry players are reeling under the impact of the coronavirus crisis-induced macroeconomic woes. The COVID-19 crisis led imposition of lockdowns had previously compelled semiconductor companies to shut down production facilities temporarily. The business impacts stemming from supply chain disruptions due to social distancing and shelter-in-place restrictions raises concerns regarding the industry’s prospects amid increasing infected cases. Although vaccination efforts have triggered gradual reopening of economies in several parts of the world, production delays remain an overhang. Moreover, the U.S.-China trade war induced tariffs and Huawei ban have been hindering growth of the industry participants for quite some time now. Markedly, the industry players generate significant portion of their revenues from China.
Zacks Industry Rank Indicates Dim Near-Term Prospects
The Zacks Semiconductors - Radio Frequency Industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #242, which places it at the bottom 5% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dim near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the bootm 50% of the Zacks-ranked industries is a result of negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are pessimistic about this group’s earnings growth potential. While the industry’s earnings estimate for 2021 has moved down 3.1% since Aug 31, 2020, the same for 2022 has declined 2.3%.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Lags S&P 500 & Sector
The Zacks Semiconductors - Radio Frequency Industry has underperformed the S&P 500 and its sector over the past year.
The industry has gained 3.7% over this period compared with the S&P 500’s and broader sector’s rally of 29.8% and 29.9%, respectively.
One Year Price Performance
Industry's Current Valuation
On the basis of forward 12-month price-to-earnings ratio (P/E), which is a commonly used multiple for valuing Semiconductors - Radio Frequency stocks, the industry is currently trading at 14.44X, lower than the S&P 500’s 21.96X and the sector’s 29.52X.
Over the past five years, the industry has traded as high as 24.12X and as low as 10.01X, with the median being at 14.21X, as the charts below show.
Forward 12-Month P/E Ratio
2 Radio Frequency Stocks to Keep a Close Eye on
Qorvo: This Zacks Rank #3 (Hold) company is riding on gains from increased demand for 5G handsets and robust improvement in the Infrastructure and Defense Products business. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Strength in smartphone vertical, upgrades in 5G smartphones, and gains from consistent growth in 5G infrastructure, power management, and defense end-markets are anticipated to drive financial performance.
The rollout of Wi-Fi 6 and 6E technologies and the growing clout of precision location applications based on UWB technology favor the company’s prospects.
Solid uptake of BAW antenna-plexers is expected to boost top-line growth. The expanding portfolio of 5G base solutions amid accelerated deployment of 5G bodes well. Besides, the growing momentum for Qorvo’s GaN technology-based solutions is positive.
Shares of Qorvo have climbed 3.1% in the past year. The Zacks Consensus Estimate for the Greensboro, NC-based company’s fiscal 2022 earnings has stayed at $11.87 per share over 30 days, indicating year-over-year growth of 18.7%.
Price and Consensus: QRVO
RF Industries: This Zacks Rank #3 company is riding on strong demand for its Optiflex hybrid fiber solutions. Growing demand for wireless carrier infrastructure builds for 5G is a tailwind for RF Industries. Increased spending from carriers deploying 5G bodes for RFIL.
RF Industries shares have risen 11.4% in the past year. The Zacks Consensus Estimate for its fiscal 2022 bottom line is pegged at 42 cents per share, unchanged over the past month, suggesting 162.5% growth over fiscal 2021.
Price and Consensus: RFIL
