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Shares of a relatively obscure supplier of technology that helps power the iPhone’s wireless communications soared in Friday trading, after
Skyworks Solutions
smashed estimates when it reported earnings late Thursday.
Skyworks stock (ticker: SWKS) surged 8.9% in Friday trading.
The chip maker’s executives didn’t mention
Apple
‘s name in the conference call or in the company’s quarterly filing with the Securities and Exchange Commission. But when CFO
Kris Sennesael
said that the company’s largest customer accounted for roughly 70% of the fiscal-first quarter revenue, Wall Street knew that was code for Apple.
“Obviously, it was a great quarter with that large customer that just launched their first 5G phones, which with very rich Skyworks content inside,� Sennesael said.
Skyworks makes radio frequency chips that smartphone makers such as Apple (AAPL) and Samsung Electronics use in their handsets.
Raymond James chips analyst
Chris Caso
wrote in a Thursday note to clients that he was encouraged that Skyworks had a strong quarter because of Apple, and not boosted by sales in China.
“Looking into the fall launch, we’re confident that [Skyworks] will maintain and grow their Apple content (which has been the subject of some debate), and we expect a benefit from improving iPhone units as well as the roll off legacy phones and moving richer content 5G phones down the iPhone stack,� Caso wrote. He raised his target price to $205 from $175, and reiterated his equivalent of a Buy rating.
Skyworks reported fiscal first-quarter adjusted earnings of $3.36 a share. Sales rose 69% to $1.51 billion compared with the year-ago quarter. Analysts had expected adjusted earnings of $2.06 a share on sales of $1.06 billion. The company also said it expected fiscal second-quarter adjusted earnings of at least $2.34 a share, and sales of $1.13 billion to $1.18 billion.
UBS analyst
Timothy Arcuri
wrote in a note to clients that he was raising his target price on Skyworks stock to $181 from $165 because of the company’s strong results and outlook. Arcuri reiterated his equivalent of a Hold rating, but said the quarter reminded him of 2013 and 2014, when the transition to 4G gave Skyworks the chance to sell many more chips because of its broad portfolio of appropriate products.
Analysts and chip companies have said that the world upgrading to 5G wireless technology will be a boon for the sector, as the bigger bandwidth communications standard also needs more chips to achieve higher transfer speeds. Skyworks’ success in its quarter ending in December suggests that other radio frequency chip makers, such as
Broadcom
(AVGO) and
Qorvo
(QRVO), may have a good year ahead.
Broadcom stock ticked up less than 0.1% to $452.07 Friday, and Qorvo gained 2.4% to $173.99.
Qualcomm
also makes communications chips that Apple uses—though Apple bought
Intel
‘s (INTC) wireless communication business in 2019, which suggests it will rely less on Qualcomm in the future. Qualcomm stock advanced 0.9% to $156.85 Friday.
In a note to clients Thursday, Mizuho Securities analyst
Vijay Rakesh
wrote that Skywork’s outlook should be “very positive� for Broadcom and Qualcomm.
Write to Max A. Cherney at [email protected]
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