Skyworks Options slips as Wells Fargo downgrades on worries over slowing 5G development

Skyworks Options (NASDAQ:SWKS) fell 2% on Tuesday as Wells Fargo downgraded the semiconductor firm, noting worries over slowing 5G handset development.

Analyst Gary Mobley lowered his ranking on Skyworks Options (SWKS) to equal weight from chubby, whereas additionally chopping the value goal to $95 from $130. Mobley identified that in a slowing 5G setting, it is unlikely buyers will transfer again to firms within the RF front-end house.

“In actual fact, over simply the previous six months, we imagine there was a rotation in every firm’s shareholder base whereby deep worth buyers have taken an curiosity within the firms,” Mobley wrote in a be aware to shoppers, whereas additionally discussing the agency’s downgrade of Qorvo (QRVO).

Mobley lowered his income and earnings estimates for 2023 and 2024 for Skyworks (SWKS). He now expects the corporate to earn $11.25 per share and generate $5.56B in income in 2023 and $11.74 per share and $5.76B in 2024, down from prior views of $11.84 in EPS and $5.79B and $12.38 EPS and $6B, respectively.

The analyst added that the downgrade got here earlier than investor sentiment will get “extra constructive” and there are indicators of the chip cycle hitting a backside.

Skyworks (SWKS) generates greater than half of its complete income from Apple (AAPL) and it is seemingly that firms with outsized publicity “will proceed to commerce at a big low cost to friends,” given the smartphone market isn’t a development business and corporations require on elevated content material for development.

Late final month, Financial institution of America lower its iPhone gross sales estimates and stated Skyworks Options (SWKS) can be among the many firms probably to be impacted.

Analysts are largely constructive on Skyworks Options (SWKS). It has a BUY ranking from Looking for Alpha authors, whereas Wall Road analysts price it a BUY. Conversely, Looking for Alpha’s quant system, which constantly beats the market, charges SWKS a HOLD.