Skyworks Solutions Faces Multi-Quarter Headwinds: 5 Analysts Give Mixed Reviews

Shares of Skyworks Solutions Inc SWKS tanked in early trading on Tuesday, after the company reported downbeat quarterly results and issued a weak guidance. Here are some key analyst takeaways from the earnings release.

• BMO Capital Markets analyst Ambrish Srivastava downgraded the rating from Outperform to Market Perform, while reducing the price target from $140 to $100.
• Susquehanna analyst Christopher Rolland reiterated a Positive rating, while reducing the price target from $130 to $125.
• Raymond James analyst Srini Pajjuri reaffirmed a Market Perform rating.
• KeyBanc Capital Markets analyst John Vinh maintained an Overweight rating and price target of $130.
• Oppenheimer analyst Rick Schafer maintained a Perform rating on the stock.

Check out other analyst stock ratings.

BMO Capital Markets

“It was not so much that Skyworks guided down June revenue vs. expectations, we can live with lower top-line in a choppy market, it is the multi-quarter headwind to GM that we are uncomfortable with, combined with the very high inventory that the company has on its balance sheet, which will likely impact the latter over several quarters,” Srivastava said in the downgrade note.

“Semi stocks typically do not do well with GM headwinds, especially when they are longer in duration,” he added.

Susquehanna

The company’s quarterly revenues were better than feared, Rolland said. Management announced a “significantly weaker guidance,” citing lower Android demand and inventory issues.

He believes the emphasis on Android was in part to “save face” for the weakness at Apple AAPL, “which was also down -18% QOQ.”

Raymond James

“Apple revenue is tracking largely as expected and management sees good content increases in 2H (iPhone 15),” Pajjuri wrote in a note. “However, the magnitude will likely be more modest this year due to a higher base and a maturing 5G cycle."

Moreover, Skyworks Solutions’ gross margin outlook came in short of expectations and it could take “few quarters to normalize,” the analyst added.

KeyBanc Capital Markets

“Surprisingly, SWKS did not attribute any of the lowered outlook to AAPL, but did reaffirm expectations that content in the next flagship (iPhone) will be up y/y,” Vinh said.

“F3Q GMs missed by 340 bps due to underutilization and are expected to remain depressed for the next several quarters,” he added.

Oppenheimer

Management expects weakness in Android demand from China to persist for the next couple of quarters, Schafer said.

“F3Q GM expected 47.5%, first time below 50% in eight years, as 500bps underutilization charges weigh,” the analyst wrote. “Mgmt under-shipping channel sell-through as inventory remains elevated at ~198 days,” he added.

SWKS Price Action: Shares of Skyworks Solutions had declined by 4.63% to $100.36 at the time of publishing Tuesday.