Buy The Apple-Related Weakness In Skyworks, Brean Says

• The share price of Skyworks Solutions Inc SWKS has declined 22.53 percent over the past one month, falling to a low of $66.867 on January 7.
• Brean Capital’s Mike Burton has maintained a Buy rating on the company, while lowering the price target from $100 to $85.
• Calling Skyworks Solutions “one of the most attractive stocks in Semis right now,” Burton stated that the recent weakness in the share price offers an attractive opportunity.

According to the Brean Capital report, “Given Qorvo Inc’s QRVO negative preliminary guidance and worse-than-normal results from elsewhere in the Apple Inc. AAPL supply chain heading into January, we see downside to Skyworks’ March quarter.

Analyst Mike Burton believes that Apple units are about 15–20 million below the previous expectations, which would translate to an over $100 million headwind for Skyworks Solutions’ mobile segments and become apparent in the March quarter.

Related Link: Apple's Stock Is Discounting All The Bad News

Burton now expects the company’s March quarter revenues to decline 16 percent sequentially, as compared to the earlier estimate of an 8 percent decline.

Other Possible Influences

However, SAMSUNG ELECTRONIC KRW5000 SSNLF is expected to launch its Galaxy S7 ahead of the Mobile World Congress, scheduled for February 22, two weeks earlier than in 2015. “Therefore, the RF names should have an additional 2 weeks of product ramp to offset Apple headwinds in the March quarter,” the report stated.

“However, RF remains our favorite growth story in broader Semis. We see global 4G proliferation continuing in 2016 and rising content due to increasing demands for mobile data,” Burton went on to say.

Skyworks Solutions is among the best positioned to benefit from these trends, and Burton expects the company to at least achieve market growth.