Wells Fargo, Raymond James Highlighted Significant Angles To Skyworks Post Q2

Analyst views remain mixed post Skyworks Solutions, Inc's SWKS Q2 results. Wells Fargo analyst Gary Mobley maintained Skyworks with an Overweight and lowered the price target from $195 to $160.

Mobley believed SWKS's Sky5 RF front-end (RFFE) module sales should benefit from 5G mobile phone sales growth. RFFE bill-of-materials (BoM) should increase 35-40% in 5G mobile phones vs. 4G comparable SKUs. 

This higher BoM is being driven by 1) higher levels of RFFE module integration due to new 5G frequency bands; 2) the need for multi-carrier support, carrier aggregation modes; and 3) a crowded frequency spectrum. 

In addition to SWKS benefiting from higher ASPs per mobile phone design win, the company's RFFE sales growth is gaining from the increase in IoT connectivity. 

The pending acquisition of SLAB's Infr & Auto business should add $0.55-0.60 in EPS accretion and some much-needed revenue diversity.

Raymond James analyst Chris Caso reiterated Outperform with a $170 price target on Skyworks following March quarter results. The company presented a mixed quarter, with F2Q inline but F3Q modestly below expectations due partly to China-related lockdown issues, offsetting incremental strength from Samsung Electronics Co, Ltd SSNLF. 

With Apple Inc AAPL business up about 23% Y/Y, content gains are consistent with earlier expectations. But with mobile up only 3% Y/Y, Caso believes the problem area is the China OEMs, as the problem predates the lockdowns. 

Broad Markets are nonetheless strong and are helping to cushion the disappointment in mobile. 

Price Action: SWKS shares closed lower by 4.97% at $113.53 on the last check Wednesday.