On Monday, Stifel reiterated a Buy rating on Skyworks Solutions (NASDAQ:SWKS), with a steady price target of $112.00. The firm anticipates that the upcoming fiscal third-quarter earnings report, due on July 30th after market close, will align with their current estimates. Despite concerns over the loss of a key component slot with Apple (NASDAQ:AAPL), Stifel's outlook on Skyworks remains positive for the long term. They believe that the market has already adjusted expectations for 2024 and 2025 to account for this loss.
Skyworks Solutions is expected to maintain its strong position in the next generation of mobile handsets, according to Stifel. The analyst firm also views the company's expansion into broader markets as a positive development. Following second-quarter earnings, management meetings hosted by Stifel highlighted Skyworks' ongoing relationship with Apple, despite the loss of a component slot.
Management also indicated Apple's increased focus on developing internal modems and projected a return to average content gains of about 10% over the next year.
The loss of the Apple socket is seen as a temporary setback that is unlikely to affect the long-term share price growth of Skyworks Solutions. The company's diverse approach and strategic positioning in the market for next-generation mobile technology provide a basis for Stifel's continued endorsement of the stock.
Skyworks Solutions' diversification strategy extends beyond its relationship with Apple. The company's management has emphasized their intact partnership with Apple and expects to recover from the current loss with a return to normal content gains in the coming year.
Investors and market watchers are now looking forward to the fiscal third-quarter earnings report from Skyworks Solutions, which will offer further insights into the company's financial health and its future in a competitive industry. The report is also expected to shed light on the company's strategy to navigate the challenges and capitalize on the opportunities ahead.
In other recent news, Skyworks Solutions has seen a series of analyst upgrades and downgrades. B.Riley upgraded the company's stock from Neutral to Buy due to a renewed confidence in its sales and earnings per share growth, particularly from its major customer. Despite this, Skyworks Solutions has also been subject to downgrades from Wolfe Research and price target cuts from firms like Citi, Piper Sandler, Rosenblatt Securities, and Mizuho.
These adjustments come in response to 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, a significant contributor to Skyworks' revenue. The company anticipates mobile demand to be lower than typical seasonal trends for the upcoming quarter, projecting a decline of 20-25% due to soft demand and surplus channel inventory.
Analysts have expressed concerns about Skyworks' reliance on Apple and the competitive landscape in China. Despite these challenges, B.Riley's analyst sees potential for "best-in-years sales re-acceleration," which could further drive the stock's recovery, while Rosenblatt Securities expects the Broad Markets segment of the business to continue its gradual increase throughout the year.
InvestingPro Insights
As Skyworks Solutions (NASDAQ:SWKS) approaches its fiscal third-quarter earnings report, real-time data from InvestingPro provides a nuanced view of the company's financial health. With a market capitalization of $18.64 billion, Skyworks Solutions is trading at a price-to-earnings ratio of 21.42, reflecting investor sentiment on its earnings capacity. Notably, the company's revenue has seen a decline over the last twelve months as of Q2 2024, with a reduction of 11.41%. Despite this, Skyworks maintains a strong gross profit margin of 41.19%, underlining its ability to manage costs effectively.
InvestingPro Tips highlight the company's commitment to shareholder returns, evidenced by its consistent dividend payments over the past 11 years and a current dividend yield of 2.34%. This is complemented by Skyworks' robust free cash flow yield, suggesting a healthy financial position. However, it's important to consider that 24 analysts have revised their earnings expectations downwards for the upcoming period, indicating potential headwinds. As investors contemplate Stifel's positive stance, these insights could be crucial in evaluating the stock's potential. For those looking to delve deeper into Skyworks Solutions' prospects, InvestingPro offers additional insights and metrics. Use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, and discover many more InvestingPro Tips to guide your investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.