On Thursday, Skyworks Solutions (NASDAQ:SWKS) stock received an upgrade from a B.Riley analyst from Neutral to Buy, with a significant increase in the price target to $130.00 from the previous $96.00.
The upgraded outlook is based on a renewed confidence in the company's sales and earnings per share (EPS) growth, particularly due to its major customer, which accounts for 60-70% of its business.
The analyst pointed out that the improved sentiment towards Skyworks Solutions comes after a challenging two-year period where the company's stock value saw a steep decline of approximately 50%.
The new price target reflects a belief in the company's capacity to reverse this trend. The analyst cited the company's strong cash flow and low debt as factors that could enable value-enhancing mergers and acquisitions (M&A) activities.
Skyworks Solutions, a semiconductor company, has been under scrutiny due to its stock's performance, but the analyst's update suggests a turning point. The endorsement marks the first positive stance from the firm on Skyworks in over two years. The analyst also noted the potential for "best-in-years sales re-acceleration," which could further drive the stock's recovery.
Despite the optimistic upgrade, the analyst acknowledged that the call is somewhat speculative until signs of the anticipated sales acceleration actually materialize. The focus now turns to the company's upcoming financial performance and market activities to see if the predicted uptick in sales and EPS will come to fruition.
In other recent news, Skyworks Solutions has been the subject of multiple analyst downgrades and price target cuts. Wolfe Research downgraded Skyworks from Outperform to Peer Perform due to concerns about the company's loss of iPhone content. This development is significant as Apple (NASDAQ:AAPL) represents a substantial portion of Skyworks' revenue.
Simultaneously, Citi maintained its Sell rating on Skyworks but reduced the price target from $85 to $83. The firm highlighted concerns about Skyworks' reliance on Apple and the competitive landscape in China. This followed the company's recent earnings report, which showed a sequential quarterly decrease of 19% and a year-over-year decline of 3% in sales to Apple.
Piper Sandler also revised its stock outlook for Skyworks, reducing the price target to $95 from $105, due to challenges in the mobile demand sector. The firm maintains a Neutral rating on Skyworks shares, suggesting a cautious stance until there is a recovery in the mobile business.
Rosenblatt Securities and Mizuho also adjusted their outlook on Skyworks, reducing their price targets to $120 and $115 respectively. Both firms maintained their Buy ratings despite acknowledging the headwinds facing the company, particularly in relation to Apple. These are recent developments that investors should be aware of.
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