S&P 500 slips, but losses kept in check as Nvidia climbs ahead of results
On Thursday, Craig-Hallum analyst Anthony Stoss adjusted the price target for Skyworks Solutions (NASDAQ:SWKS) to $85.00, down from the previous $105.00, while still maintaining a Buy rating on the company’s shares. Currently trading near its 52-week low at $64.21, InvestingPro analysis suggests the stock is undervalued, with additional ProTips highlighting its strong free cash flow yield and low price volatility. Stoss explained that despite the long-term positive outlook for Skyworks Solutions due to the anticipated growth in AI-enabled smartphones, there is an expectation for investors to be selective with their investments as the company recalibrates its estimates following content losses with Apple (NASDAQ:AAPL).
Skyworks Solutions is expected to see a reduction in content by 20-25% for the fiscal year 2025 as a result of increased competition, primarily from Broadcom (NASDAQ:AVGO), according to management. The company maintains a strong financial position with a current ratio of 5.54 and operates with moderate debt levels, as revealed by InvestingPro data. Despite this setback, the Broad Markets segment has been highlighted as a continuing success story, with management anticipating sustained modest growth after achieving growth for the fourth consecutive quarter. Additionally, growth is expected in the automotive sector for FY25, which should help balance the ongoing weakness in infrastructure and industrial markets.
Stoss noted that gross margins remained flat in December but are projected to decline and stay lower due to the content loss with Apple. However, he commended the Skyworks management team for another solid quarter of free cash flow (FCF) and their commitment to enhancing shareholder value. This commitment is evidenced by the announcement of a $2 billion stock buyback program.
Concluding his commentary, Stoss expressed confidence in the long-term growth potential of Skyworks Solutions and their strategy of returning cash to shareholders through dividends and the newly announced buyback. Despite this, he suggested that investors should be cautious in the near term due to potential volatility in the market.
In other recent news, Skyworks Solutions has been the focus of multiple analyst adjustments following significant developments. TD Cowen reduced its price target for Skyworks Solutions from $90 to $75, citing a 20-25% loss in content at its leading iOS customer, which could potentially impact the company’s annual revenue by approximately $600M. Loop Capital also cut its target for Skyworks from $90 to $70, estimating an annual decrease in sales between $500 million and $550 million due to reduced involvement in the iPhone 17 production.
KeyBanc Capital Markets maintained its Sector Weight rating on Skyworks, highlighting the company’s expected loss in the upcoming iPhone 17 production. The company announced a leadership change with CEO Liam Griffin stepping down to be succeeded by Philip Brace. Needham maintained a Hold rating on Skyworks, pointing to the company’s commitment to investing in its operations despite a predicted 20-25% content reduction in the iPhone 17, potentially reducing Mobile revenue by over $380 million year-over-year.
Goldman Sachs cut its price target for Skyworks to $70 from $92, while keeping a Neutral rating, following the company’s announcement of a significant reduction in RF dollar content in this year’s leading customer’s flagship phone. All these recent developments reflect the market’s sensitivity to changes in business relationships with major customers, particularly for technology companies like Skyworks Solutions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.