Skyworks Solutions stock slipped Wednesday, amid concerns about Apple iPhone production cuts and an analyst downgrade.
Baird analyst Tristan Gerra cut his rating on the provider of mobile phone radio chips to Neutral from Outperform.
Gerra set a new Skyworks (ticker: SWKS) price target of $165, down from $220. Skyworks shares closed Tuesday at $158.65, and were down 1.8% on Wednesday to $155.59.
Gerra expects a “secular slowdown” in the growth of radio-related components in high-end smartphones, from 30% growth last year to 10% this year, with even more modest growth in the years ahead. He notes that a shift to 5G phones materially increased the radio chip “content” per device, but that the shift has now largely been accomplished. He also says that after the company won market share at its key customer a few years ago (a reference to Apple
), Skyworks’ market share “appears to be stabilizing going forward.”
As for the recent reports that Apple is cutting iPhone 13 production given component shortages, Gerra comments that supply constraints could reduce shipments “throughout the duration of this new iPhone cycle versus initial expectations.”
In addition, 5G phone adoption in China has reached 75% to 80%, “suggesting 5G phone units will more closely track overall smartphone units going forward as the 5G adoption rate is maturing,” he writes.
Gerra’s per-share earnings estimates for Skyworks are well below those of the Street. He projects earnings of $9.25 a share for the September 2021 fiscal year, below the Street at $10.41, and $10.55 a share for fiscal 2022, with consensus at $11.50.
Write to Eric J. Savitz at [email protected]
