Skyworks Solutions price target raised $15 by JPMorgan
On Wednesday, JPMorgan adjusted the financial outlook for Skyworks Solutions (NASDAQ:), increasing the price target from $105.00 to $120.00, while maintaining a Neutral rating on the stock.
The firm’s decision follows Skyworks’ recent financial reporting, which showed results for the June quarter in line with expectations. The report highlighted a projected revenue increase of 13% quarter-over-quarter for the September quarter, coinciding with seasonal trends and a rebound in iPhone sales, which are anticipated to grow by 20% in the mobile sector.
Skyworks Solutions, a key supplier to Apple (NASDAQ:), experienced a decline in demand and inventory adjustments from its largest customer, which impacted its financial performance. However, signs of normalizing inventory and order patterns have emerged, suggesting a healthier outlook.
The company’s guidance indicates continued quarter-over-quarter growth leading into the typically robust December quarter, hinting at a strong iPhone refresh cycle driven by advancements in artificial intelligence.
The company’s presence in the Android market is also notable, with stable quarter-over-quarter performance in the June quarter, and expectations for growth over time.
Skyworks Solutions is poised to benefit from its significant exposure to leading Android manufacturers such as Samsung (KS:) and Google (NASDAQ:). The forecast anticipates the Android segment returning to quarterly revenues between $150 million and $200 million.
In addition to mobile, the Broad Markets segment of Skyworks’ business is also showing signs of recovery, marking a second consecutive quarter of modest growth. This is primarily attributed to consumer IoT products, although tempered by weaker demand in the automotive, industrial, and infrastructure sectors.
Looking ahead, modest quarter-over-quarter growth is expected to continue into 2025, with a more pronounced acceleration in the middle of that year due to more synchronized growth across sectors.
Gross margins are improving, albeit at a slower pace than anticipated, with the potential to exceed 50% in fiscal year 2026. The company has been navigating a challenging macroeconomic and market environment by exercising disciplined operational expenditure control and moderating capital expenditure levels, while still achieving strong free cash flow per share.
Following these developments, JPMorgan has revised its estimates and raised the price target for Skyworks Solutions to the new $120 target.
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