S&P 500 slips, but losses kept in check as Nvidia climbs ahead of results
On Thursday, TD Cowen’s analysts adjusted their expectations for Skyworks Solutions (NASDAQ:SWKS), reducing the price target from $90.00 to $75.00 while maintaining a Hold rating on the stock. According to InvestingPro data, the stock is currently trading near its 52-week low at $87.08, with analyst targets ranging from $55 to $120. The revision follows Skyworks Solutions’ disclosure of a significant reduction in business with its primary customer. The company anticipates a 20-25% loss in content at its leading iOS customer, which accounted for 72% of total CQ4 revenue and approximately 70% of CY24 revenue.
The decision by Apple (NASDAQ:AAPL) to dual source radio frequency (RF) components, mainly low band, for the upcoming iPhone 17 is cited as the primary reason for the reduced revenue forecast. This change is expected to decrease Skyworks’ content contribution by 20-25%, with an estimated revenue impact of around $150M in the SepQ period, assuming year-over-year unit shipments remain constant. The potential annual run-rate revenue impact could be approximately $600M. Despite these challenges, InvestingPro analysis shows the company maintains strong financials with a healthy free cash flow yield of 12% and operates with moderate debt levels.
TD Cowen’s revision of the price target is also based on a reduction in their FY26 earnings estimates for Skyworks, from $6.30 to $4.65. The firm notes that this anticipated content loss follows a near 10% loss in the iPhone 16 to Qualcomm (NASDAQ:QCOM), a competitor also covered by Joshua Buchalter.
The report suggests that the market will be looking closely at Apple’s RF sourcing strategy for the iPhone 18 next year to gauge the longer-term implications for Skyworks. Until then, the analysts at TD Cowen expect the stock to trade sideways, reflecting the market’s uncertainty regarding the future relationship between Skyworks and its key customer. InvestingPro subscribers can access detailed financial health scores and 8 additional ProTips that provide deeper insights into Skyworks’ valuation and future prospects.
In other recent news, Skyworks Solutions has been the subject of several analyst adjustments following the company’s latest earnings call. Loop Capital has reduced the price target for Skyworks from $90 to $70, maintaining a Hold rating. This decision comes after Skyworks management announced a significant reduction in the company’s involvement in the iPhone 17, which is expected to result in an annual sales decrease of $500 million to $550 million.
KeyBanc Capital Markets has maintained its Sector Weight rating on Skyworks without altering the price target. The company’s earnings and guidance met market expectations, but a significant loss in iPhone 17 production share was revealed. In response to these developments, Skyworks announced a change in leadership, with CEO Liam Griffin stepping down to be succeeded by Philip Brace.
Needham has maintained a Hold rating on Skyworks following the earnings report, noting significant changes in the company’s business with Apple. Skyworks’ content in the iPhone 17 will be substantially reduced, decreasing content by approximately 20-25% through fiscal year 2026. Despite this, Skyworks is committed to investing in its operations and plans to increase operating expenses materially through FY26.
Goldman Sachs has revised the price target for Skyworks down to $70 from $92, keeping a Neutral rating on the company’s shares. This adjustment follows the company’s announcement of a significant reduction in RF dollar content in the year’s leading customer’s flagship phone. Despite the downturn in the RF segment, there is optimism about the recovery of the Broad Markets business and potential for a rebound in RF dollar content in the next year’s flagship phone from Apple.
Lastly, Citi analysts have adjusted their outlook on Skyworks, reducing the price target to $118 from $135 while maintaining a Buy rating on the stock. Despite surpassing Wall Street’s expectations for the fourth quarter of 2024, the company’s adjusted earnings per share (EPS) guidance fell short of the consensus estimate.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.