On Wednesday, Rosenblatt Securities adjusted its outlook on Skyworks Solutions (NASDAQ:SWKS), reducing the stock's price target to $120 from the previous $130. The firm maintained its Buy rating on the shares despite acknowledging headwinds facing the company.
Skyworks Solutions, a semiconductor company, has experienced a decrease in Mobile demand since March, which continued into April. This decline prompted the company to slow down shipments in order to reduce channel inventory over the June quarter.
Moreover, the company discussed the loss of a component socket in the upcoming iPhone model, which is expected to result in a 10% reduction in content compared to the current iPhone model.
This anticipated loss of the iPhone socket had already been speculated, and according to Rosenblatt, should not come as a shock to investors. Despite the setback, the firm projects that Skyworks may recover the socket and gain additional content by 2025.
The Broad Markets segment of the business, which represents 35% of revenue, showed a modest growth of approximately 2% quarter over quarter and is forecasted to continue its gradual increase throughout the year.
In light of these developments, Rosenblatt has revised its estimates downward for Skyworks Solutions. The new 12-month price target of $120 is based on a 15 times multiple of the firm's next twelve months (NTM) Non-GAAP EPS projections. The adjustment reflects the immediate challenges faced by the company, balanced by the long-term growth expectations in other areas of its business.
InvestingPro Insights
As Skyworks Solutions navigates through the current challenges in the semiconductor industry, real-time data from InvestingPro provides a clearer picture of the company's financial health and potential.
The market capitalization of Skyworks Solutions stands at $17.1 billion, with a P/E ratio of 18.49, which adjusts slightly to 18.11 when looking at the last twelve months as of Q1 2024. Despite a revenue decline of 12.44% over the same period, the company maintains a robust gross profit margin of 42.55%.
InvestingPro Tips highlight the company's financial prudence and shareholder value. Skyworks Solutions showcases a high shareholder yield and has successfully raised its dividend for 10 consecutive years, signaling confidence in its financial stability.
Moreover, 14 analysts have revised their earnings projections upwards for the upcoming period, which could indicate potential growth prospects. The company's valuation implies a strong free cash flow yield, further underscoring its attractiveness to investors.
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