Stephens Analyst Upgrades Skyworks, Predicts It Will Beat Quarterly Outlook

In a report published Monday, Stephens analyst Harsh Kumar upgraded the rating on

from Equal-Weight to Overweight, while raising the price target from $110 to $120, citing the company's "solid" fundamentals. Analyst Harsh Kumar believes that Skyworks is poised to beat the June quarter expectations and announce above-consensus guidance for the September quarter, given the company's exposure to the large North American smartphone OEM, which is "expected to ramp new products" in the back half of this year, and 4G subscribers in China had continued to rise. In the report Stephens noted, "We continue to believe fundamentals remain solid for the company as content is on the rise on high-end phones as well as the transition to 4G on the mid-to-low end phones. On the high-end, we are seeing increased complexity which is driving more bands per phone." Kumar believes that there were "new opportunities for content additions" as diversity tuners are likely to "gain more traction as demands for data continue to increase." Kumar added, "…we believe the transition from 2G/3G phones to 4G in China remains underway and is driving strong dollar content increases for RF." "We believe this trend is favorable for SWKS as the content goes from sub $0.50 of content per phone in 2G upwards of $4 in low-end 4G phones," the report stated. The non-GAAP EPS and earnings estimates for FY15 and FY16 have been raised from $5.08/$3.22 billion to $5.15/$3.25 billion and from $5.61/$3.51 billion to $6.02/$3.68 billion, respectively.