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Investing.com - Morgan Stanley (NYSE:MS) has lowered its price target on Skyworks Solutions (NASDAQ:SWKS) to $65 from $68 while maintaining an Equalweight rating on the stock. According to InvestingPro analysis, the stock appears undervalued at its current price of $67.63, with metrics showing a compelling 13% free cash flow yield.
The research firm noted that the smartphone supply chain has performed better than expected during the current earnings period, partly driven by real demand strength based on Apple (NASDAQ:AAPL)’s recent comments.
Morgan Stanley highlighted challenges in calibrating content shifts for Skyworks, including content loss to Broadcom (NASDAQ:AVGO) but gains as Apple transitions to internal baseband technology. The firm expects Apple content per phone to be a headwind through next year as iPhone 17 drives most of the year.
Despite Skyworks reporting encouraging numbers, Morgan Stanley suggested these positive results may simply delay "inevitable headwinds" for the company. The firm also noted that competitor Qorvo (NASDAQ:QRVO) has underperformed on margins, potentially leaving room for more earnings per share improvement with fewer headwinds.
For the price target calculation, Morgan Stanley maintained its 16x multiple on calendar year 2026 non-GAAP earnings per share, which decreased slightly to $4.04, resulting in the lower $65 target.
In other recent news, Skyworks Solutions reported impressive financial results for the third quarter of fiscal year 2025, surpassing both earnings and revenue expectations. The company achieved earnings per share of $1.33, which was above the forecasted $1.24, resulting in a 7.26% surprise. Revenue for the quarter was reported at $965 million, exceeding the anticipated $940.85 million. Additionally, Skyworks Solutions provided guidance for the September quarter with expected revenue of $1.02 billion, surpassing consensus estimates of $883 million and indicating a 5% quarter-over-quarter increase.
In another development, Mizuho (NYSE:MFG) adjusted its price target for Skyworks Solutions, lowering it from $75.00 to $70.00 while maintaining a Neutral rating on the stock. This adjustment was influenced by headwinds related to iPhone content. These recent developments highlight the company’s strong financial performance and the cautious outlook from analysts.
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