Goldman Sachs upgraded Qorvo due to its smartphone stabilization, growing 5G infrastructure business, and margin expansion at a compelling valuation.

"We upgrade QRVO to Buy from Neutral with an updated 12-month price target of $79 which represents 14% potential upside. ..The ﬁve key pillars supporting our constructive view are, 1) smartphone unit stabilization: while we are not quite out of the woods yet, we are beginning to see early signs of smartphone unit stabilization with near-term upside in China offsetting marginal weakness at Apple, per our checks, 2) strength in 5G infrastructure: recent checks at Mobile World Congress suggest that 5G base station deployments are being pulled in and that strength is sustainable through 2020/2021 (note QRVO's base station business accounts for ~30% of Infrastructure and Defense Products segment sales or ~10% of total sales), 3) margin expansion opportunity: we believe management has room to improve gross margins and we note on their most recent earnings call they guided FY4Q (March) non GAAP gross margins to 47% (or 170bps below Street expectations ahead of the call) and FY1Q (June) to "below 46%". Importantly, we believe the ongoing restructuring initiatives (phased closure of Florida SAW ﬁlter facility+ delayed ramp of Farmers Branch BAW ﬁlter facility) coupled with other cost-cutting measures (introduction of Micro-BAW as well as improved dicing techniques) and better business mix stemming from above-average growth in the IDP business will drive an expansion in margins over the next 12-24 months, 4) robust FCF generation: we see FCF generation improving further in FY20/21 under the assumption that operating margins improve, working capital management remains disciplined and capex intensity is reduced, 5) compelling valuation: we believe current valuation multiples under-appreciate the top- and bottom-line growth potential of the company..."