Analyst Note| Brian Colello, CPA |
Skyworks Solutions reported predictably strong fiscal second quarter results and provided investors with a solid fiscal third quarter outlook, in light of tremendous demand for radio frequency, or RF, chip content going into Apple’s iPhones, other 5G smartphones, and broad market devices using WiFi 6 and other connectivity solutions. We are raising our fair value estimate for narrow-moat Skyworks to $192 from $176 as we’re more optimistic about near-term and long-term broad market revenue. We view shares as fairly valued. Given Apple’s tremendous recent earnings beat, however, we suspect that investors were betting on even stronger near-term growth, as the stock fell about 7% after hours. Overall, we remain pleased with Skyworks’ 5G content gains and are especially impressed with the company’s broad market revenue growth (a segment that should see continued growth after Skyworks closes its acquisition of Silicon Labs’ infrastructure and automotive business).