Skyworks Hits Roadblock With Apple Content Loss, Analysts See Tough Road For Recovery

Skyworks Solutions, Inc. SWKS shares are trading lower on Thursday.

Yesterday, the company reported quarterly financial results and announced a CEO transition.

Skyworks expects second-quarter revenue to be between $935 million and $965 million, and adjusted earnings of $1.20 per share.

Here are the analysts’ take on the stock:

• Stifel analyst Ruben Roy downgraded Skyworks to Hold from Buy, lowering the price forecast to $62 from $105.
• KeyBanc Capital Markets analyst John Vinh reiterated the Sector Weight rating on the stock.
• Raymond James analyst Srini Pajjuri maintained the Market Perform rating on the stock.

Stifel: Roy noted that the firm had lost content with its largest customer, Apple Inc., due to a dual-sourced socket strategy, with Broadcom Inc. as the second source.

A 20%-25% content reduction is expected in the iPhone 17, and recovery isn’t likely until Apple shifts more toward internally sourced modems.

As a result, revenue and profitability are expected to be much lower than previous forecasts through FY26, Roy writes.

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The analyst lowered FY25 EPS estimates to $4.69 from $5.85.

Skyworks’ recovery may begin in FY27 with the iPhone 18, depending on Apple’s modem progress.

However, increased competition and dual-sourcing risks remain long-term, Roy writes.

KeyBanc Capital Markets: Per Vinh, the flat iPhone unit estimate balances out the potential content gain opportunity, while a greater focus on non-mobile markets could improve earnings predictability and long-term growth.

Skyworks is well-positioned to capitalize on the growing wireless connectivity demands from the Internet of Things, per the analyst.

Additionally, industry consolidation is expected to lead to pricing stability and margin expansion. The shift to 5G should open up increasing content opportunities, supporting growth above the industry average, the analyst writes.

Vinh lowered the FY25 EPS estimate to $4.67 from $5.43.

Raymond James: The analyst projects Apple’s 5G modem transition to be a multi-year process, which could slow the recovery pace.

Android sales remained flat quarter-over-quarter, contributing less than 10% of revenue.

Skyworks secured 5G content for several premium Android smartphones and anticipates continued growth to help offset the content decline at Apple.

Looking ahead, management projects a seasonal decline in Mobile revenue, with a drop in the mid to high-teens percentage range for the March 2025 quarter, the analyst notes.

Price Action: SWKS shares are trading lower by 23.4% to $66.71 at last check Thursday.

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