Home / iPhone / Analysts Boost Skyworks Target On Strong 2017 Outlook, iPhone 8 Sales – Barron's (blog)

Analysts Boost Skyworks Target On Strong 2017 Outlook, iPhone 8 Sales – Barron's (blog)


Skyworks Solutions (SWKS)  is higher Monday, helped by a pair of bullish analyst notes.

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Both Canaccord Genuity’s T. Michael Walkley  and Barclays’ Blayne Curtis both reiterated Buy ratings on the stock today and increased their price targets, citing a bright outlook for higher growth in 2017.

Canaccord’s Walkley increased his price target by $9, to $105, citing the rosy outlook from last week’s  Mobile World Congress. From his note:

Overall MWC meetings lead us to believe Skyworks is well positioned for strong trends throughout C2017 driven by strong content share with leading Chinese smartphone OEMs including Vivo, Oppo, Meizu, Xiaomi and Huawei. In fact, Huawei was Skyworks’ second largest customer during its December quarter, and our meetings with Huawei suggest a very strong long-term relationship with Skyworks for future high-end smartphones. We also believe Skyworks is increasing content with Samsung and is well positioned for content growth with new Samsung products ramping in the upcoming quarters. We believe other Chinese OEMs will follow Huawei’s leadership with increased RF content with an increasing mix of mid to high tier smartphones adding diversity/receive modules for carrier aggregation. We also believe Skyworks inventory situation has improved with the reduction of iPhone 6S inventory during the December quarter, positioning Skyworks for strong year-over-year growth trends in 2017. We now anticipate Skyworks will return to year-over-year growth with Apple (AAPL) and is well positioned for potential double-digit growth with the iPhone 8 during 2H/C2017.

Barclays’ Curtis boosted his target price by $15, to $100, citing his recent meetings with the company and its optimistic outlook for the rest of the year (and beyond). From the note:

In the near term, Mobile will grow low teens y/y as RF devices across geographies demand more connectivity content. In addition to gains at AAPL (getting “fair share” of 10-15% TAM increase) and Samsung (increased content in mid-tier phones), the company also highlighted the opportunity in China (exposed to 4G players growing 10%, less so 3G/2G players) with higher end OEMs like Oppo, Vivo and Huawei. Longer term, growth is expected to come from IoT (growing 15-20% yearly) driven by connected autos, factory automation and 5G (Broad Markets growing faster than company at higher GM). Operationally, SWKS is confident in hitting 53% GMs and returning 40-50% of FCF. There is an openness to return more cash to shareholders with M&A sounding less likely. Net net, SWKS is positioned for further growth and we strategically remain positive on the AAPL supply chain into the IP8 cycle.

Skyworks is up 0.8% to $95.68 in recent trading, and is up more than 28% since the start of the year.

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