Analysts: Skyworks Solutions Sees New Markets

Skyworks Solutions Inc's SWKS growing opportunity in the so-called Internet of Things may help it smooth out seasonal bumps in its core business of supplying the handset industry, an analyst said Friday.

The semiconductor company posted a 51 percent revenue gain Thursday but shares fell sharply Friday on "extremely elevated expectations," Ascendiant's Cody G. Acree said.

Skyworks traded recently down 3.8 percent at $59.73 per share.

But Acree raised his price target 20 percent to $70 per share and maintained a Buy rating on the stock.

Skyworks' growth is partly based on supplying handset components to Apple Inc. AAPL and Samsung Electronics SSNLF. But Acree said business outside of its historic core cellular market may offer accelerating growth.

New markets for connected devices -- the Internet of Things -- that range from medical devices to cars and refrigerators, may enable Skyworks to post strong results during quarters where handset sales may be seasonally soft, or "enduring temporary inventory corrections," Acree said.

But Skyworks' cellular market is quite healthy and Oppenheimer's Rick Schafer said the current "boom cycle" for its radio-frequency chips "remains in early innings."

Schafer raised his target 23 percent to $80 and maintained an Outperform rating.

Pacific Crest's John Vinh said Skywork's recent business gains in supplying Apple outweighed recent relative softness from Samsung.

Skyworks increasing focus on "non-mobile applications" is likely to result in wider profit margins and "longer-term sustainable growth," according to Vinh, who boosted his target 15 percent to $72 and maintained an Outperform rating.