On Wednesday, Mizuho adjusted its outlook on Skyworks Solutions (NASDAQ:SWKS), reducing the price target to $115 from $125, while reaffirming a Buy rating for the semiconductor company's stock.
The revision follows Skyworks' recent financial disclosures, which showed the company's performance and projections aligned with expectations for the March quarter but indicated a weaker forecast for the June quarter. Skyworks anticipates revenue to drop to $900 million, a significant decrease compared to the consensus estimate of $1.02 billion.
The company's earnings report revealed a quarter-over-quarter decline of 14%, with handset revenues expected to fall by over 20%.
However, the Broad Markets sector is projected to see a slight increase. The primary factors influencing this outlook include a seasonal downturn, inventory adjustments in the mobile segment, and anticipated market share losses at Apple (NASDAQ:AAPL), which comprises 68% of Skyworks' March quarter revenue. This is particularly relevant as Apple gears up for the release of the iPhone 16, which could present challenges in the first half of 2025.
Despite these headwinds, Mizuho remains optimistic about Skyworks' future, citing potential improvements in the Broad Markets and China Android sectors, as well as better gross margins throughout 2024.
The firm's analysis suggests that while Skyworks may face near-term obstacles with Apple, these could conversely benefit Qualcomm (NASDAQ:QCOM) in the short term. The firm has factored these elements into its decision to maintain a positive stance on Skyworks while adjusting financial estimates and the price target accordingly.
InvestingPro Insights
As Skyworks Solutions (NASDAQ:SWKS) navigates through its current financial landscape, key metrics from InvestingPro provide a more detailed perspective on the company's performance. With a market capitalization of $17.1 billion and a P/E ratio that has slightly decreased to 18.11 over the last twelve months as of Q1 2024, Skyworks appears to maintain a stable valuation. This is further supported by the company's high shareholder yield and consistent dividend growth, having increased its dividend for 10 consecutive years. Additionally, the company's strong free cash flow yield suggests a robust financial foundation.
InvestingPro Tips highlight that analysts have revised their earnings upwards for the upcoming period, reflecting potential optimism in Skyworks' ability to rebound from recent challenges. Moreover, the company's liquid assets surpass its short-term obligations, indicating financial resilience. With a moderate level of debt, Skyworks is positioned to manage its financial commitments effectively. For readers interested in a deeper dive into the company's financial health and prospects, there are additional InvestingPro Tips available at: https://www.investing.com/pro/SWKS
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