Soft Apple, Samsung Handset Demand A Common Theme Across Semiconductor Stocks, KeyBanc Says In Earnings Preview

After blue-chip tech stocks impressed the Street with first-quarter results that beat expectations, the stage is set for another slew of earnings reports from the sector — this time from semiconductor stocks that are predominantly Apple Inc. AAPL suppliers.

KeyBanc Capital Market issued a preview of five semiconductor names' earnings: Cirrus Logic, Inc. CRUS, Integrated Device Technology Inc IDTI, Monolithic Power Systems, Inc. MPWR, Qorvo Inc QRVO and Skyworks Solutions Inc SWKS.

The Analyst

Analyst John Vinh has the following ratings and price targets on semiconductor stocks: 

• Cirrus Logic: Sector Weight. 
• Integrated Device Technology: Overweight/$37. 
• Monolithic Power Systems: Overweight/$135. 
• Qorvo: Sector Weight.
• Skyworks Solutions: Overweight/$125.

Cirrus Logic: Limited Catalysts, But Valuation Cushions Downside

Given Cirrus Logic's roughly 95-percent exposure to combined Apple and Samsung Electronics Co Ltd SSNLF, continued weak iPhone demand and the Korean company's forecast for soft Galaxy S9 demand poses risk to forward estimates, Vinh said in a Sunday note. (See the analyst's track record here.) 

The analyst projects limited downside, as he said the stock is trading at a discount to its median multiple.

Cirrus reports fourth-quarter results Wednesday, May 2 after the close. 

KeyBanc Expects Solid Results From Integrated Device Tech

Vinh is looking for solid results and better-than-expected guidance from Integrated Device Tech thanks to robust server demand and an accelerating transition to Purley in conjunction with increasing LRDIMM attach rates.

"We see Intel Corporation INTC's DCG strength as a positive read-through for IDTI's memory interface business," the analyst said.

Notwithstanding headwinds such as the ZTE ban and weak Samsung GS9 order cuts, Vinh said he expects the company to benefit from server strength and accordingly sees a positive bias to forward estimates.

Integrated Device Tech reports Monday, April 30 after the close. 

See also: Analyst: 5 Headwinds Facing Skyworks Solutions

Monolithic's Results Driven By Data Center Strength, Purley Uptake

Monolithic Power is likely to report solid Q1 results and higher second-quarter guidance, helped by data center strength and an accelerating Purley uptake, Vinh said. Intel's data center strength, especially in cloud, is a positive for the company, the analyst said. 

Monolithic reports Monday, April 30 after the close. 

Qorvo Could Report In-Line Results, Lower Guidance

KeyBanc expects Qorvo to report in-line fourth-quarter results but guide lower due to disappointing iPhone 8/X sell-through. Samsung's weak Galaxy S9 demand could also impact results and guidance, although improving Chinese handset demand could be a mitigating factor, the firm said.

"While we expect QRVO to gain content in the next-generation iPhone related to the carrier aggregation multiplexer, uncertainty associated with how much share has been garnered keeps us at Sector Weight," Vinh said. 

Qorvo reports Wednesday, May 2 after the close. 

Short-Term Caution On Skyworks 

Citing weakness at Apple and Samsung, Vinh said he is incrementally more cautious on Skyworks in the near term, although improving Chinese handset demand is likely to be the saving grace, he said. 

The analyst continues to recommend owning the stock, as he sees greater visibility to content gains of over 20 percent in the next-generation iPhone.

Skyworks reports second-quarter results Thursday, May 3 after the close. 

The Price Action

The semi stocks' year-to-date gains or losses are as follows: 

• Cirrus Logic has lost 30.2 percent. 
• Integrated Device Technology has lost 2.96 percent. 
• Monolithic Power Systems has gained 7.3 percent.
• Qorvo has gained 1.2 percent.
• Skyworks Solutions has lost 8 percent. 

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