27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
Skyworks Solutions Inc (NASDAQ:SWKS) reported better-than-expected fiscal 2018 first-quarter results Monday and issued upbeat guidance for the second quarter. The company announced a $1-billion stock buyback plan and raised its cash return targets.
The Analyst
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BMO Capital Markets analyst Ambrish Srivastava upgraded Skyworks from Market Perform to Outperform and increased the price target from $100 to $120, suggesting roughly 27-percent upside.
The Thesis
Skyworks' ability to sustain a higher free cash flow-to-sales ratio; a higher commitment to capital allocation; a number reset in the nearer term; and an attractive valuation prompted the upgrade, Srivastava said in a Tuesday note.
BMO raised its fiscal 2018 and 2019 earnings per share estimates for Skyworks from $6.78 and $7.57, respectively, to $7.31 and $8.54. The lower revenue reset for 2018 was less than what Srivastava modeled, he said.
BMO's estimates are now higher due to a combination of lower-than-expected tax rates for 2018 and 2019 and higher revenues, the analyst said.
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"While we have thought of Skyworks' operating model as more analog-like given its OM and trajectory of the FCF-sales ratio, we had struggled with the lack of follow-through on capital allocation," Srivastava said.
Skyworks has tackled the issue by raising its capital allocation target from a prior 40-50 percent of the free cash flow to 60-75 percent, the analyst said.
The valuation of Skyworks shares is attractive, according to BMO.
The Price Action
Skyworks shares are down over 3 percent over the past year.
Shares were surging 11.14 percent to $105.23 after the open Tuesday.
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27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.