Should You Buy The Skyworks Dip? Analysts Debate

Skyworks Solutions Inc SWKS reported Thursday its fiscal fourth-quarter results, which came in better than expected but management's first-quarter guidance came in weak.

Here is a summary of what some of the Street's top analysts are saying after the print.

The Analysts

• Morgan Stanley's Craig Hettenbach maintains an Underweight rating on Skyworks Solutions with a price target lowered from $79 to $76.
• Bank Of America's Vivek Arya downgrades from Buy to Neutral, price target lowered from $120 to $92.
• Charter Equity Research's Edward Snyder downgraded from Buy to Market Perform.
• KeyBanc Capital Markets' John Vinh maintains at Overweight, price target lowered from $120 to $100.

Shares of Skyworks Solutions were trading lower by more than 8.5 percent at $76.04 Friday afternoon.

Morgan Stanley: Weakest In Years

Skyworks reported a modest revenue and earnings beat, but Hettenbach said in a note guidance represents the weakest outlook seen in more than two years. The poor outlook was attributed to weakness in high-end smartphones and poor performance of Chinese OEMs.

Bank Of America: Maturation Of Core

Skyworks' fourth quarter shows the company's core high-end smartphone market is in a mature phase and the company can no longer count on content to offset unit weakness until the expected 5G cycle in 2020, Arya said in a note. The company showed a high level of capital expenditure at 11 percent of sales, which acted as a drag on free cash flow.

Skyworks' outlook looks poor and a bullish stance can no longer be warranted as the company is exposed to the "volatility of iPhone sentiment," the analyst said.

Charter Equity: Good Trends But iPhone Concerns

Skyworks' report was released a bit later in the quarter than normal, which Snyder said gives the company a better picture of near-term iPhone trends. The poor guidance likely takes into account iPhone unit problems, poor demand in China and overall macroeconomic concerns. These concerning trends could persist for some time and the company's 5G catalysts aren't evident in the near-term.

KeyBanc: Content Growth Not Strong Enough

Skyworks' outlook reaffirms management's belief it will see growth in fiscal 2019 aided by design-wins at Apple Inc. AAPL, and mid-tier devices among China OEMs and Samsung, Vinh said in a note.

Encouragingly, the company finally acknowledged a key internal development milestone in its premium BAW filter with expectations of a ramp by the end of calendar year 2019. The BAW commentary offers a higher degree of confidence in long-term secular RF content growth into the 5G cycle.

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