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On Friday, Citi analysts updated their outlook on Skyworks Solutions (NASDAQ:SWKS), increasing the price target to $84 from the previous $72 while maintaining a Sell rating on the company's stock.
The revision follows a meeting with the management team of Skyworks at the Consumer Electronics Show (CES).
The analysts highlighted that Skyworks has successfully reduced its sales exposure to China through a strategic mix shift and local competition in the RF sector. This adjustment is seen as a significant de-risking move for the company. Furthermore, the analysts noted that Skyworks could potentially regain approximately $2 of content per device as Apple (NASDAQ:AAPL) begins to insource its modem technology over the coming three years.
Despite these positive developments, Citi analysts expressed concerns regarding Skyworks' current valuation. The stock is currently trading at 14 times earnings, which is above its three-year average of 11 times. The analysts believe that for Skyworks to justify its valuation, a transformative acquisition would be necessary to expand its serviceable available market (SAM) in the broad markets.
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