On Wednesday, a Craig-Hallum analyst adjusted the stock price target for Skyworks Solutions (NASDAQ:SWKS), a semiconductor company, to $140, marking an increase from the previous $125 target. The firm maintained a Buy rating on the stock.
The analyst's optimism is rooted in the company's strong positioning for long-term growth, driven by the anticipated increase in AI-enabled smartphones. The expectation is that Mobile revenues will rise approximately 20% for the September quarter, primarily due to Apple (NASDAQ:AAPL)'s performance, while Android sales are projected to remain stable or decrease slightly.
Skyworks Solutions is expected to see a 12.6% rise in overall revenues from June to September, with Apple's growth contributing significantly to this increase. The Broad Markets segment is predicted to see a modest growth of about 1-2% quarter over quarter. The company's enthusiasm is also linked to the potential of AI-enabled smartphones to spur the next handset upgrade cycle, currently averaging four years.
The company's financial health appears robust, with Skyworks Solutions reporting $249 million in free cash flow (FCF) for the third quarter, which translates to a 27.5% FCF margin. Management is confident in sustaining strong FCF moving forward. Additionally, gross margins (GMs) were guided to improve sequentially to 46.5% at the midpoint and are expected to continue their gradual increase throughout 2024.
Despite a challenging macroeconomic environment, the analyst believes in Skyworks Solutions' long-term strategy and potential. However, they advise investors to be selective, noting that the mobile sector presents a mixed outlook in the short term.
In other recent news, Skyworks Solutions has been the focus of several noteworthy analyst updates. Piper Sandler has maintained a Neutral rating on Skyworks Solutions, adjusting its price target to $115.00, following the company's reported earnings which surpassed expectations. Similarly, JPMorgan (NYSE:JPM) also maintained a Neutral rating, raising the price target to $120.00 in light of Skyworks' recent financial performance and projected revenue increase.
Stifel reiterated a Buy rating on Skyworks Solutions, maintaining a price target of $112.00, expressing a positive long-term outlook despite the loss of a key component slot with Apple. B.Riley analyst upgraded Skyworks Solutions from Neutral to Buy, increasing the price target to $130.00, based on renewed confidence in the company's sales and earnings per share growth.
Contrarily, Wolfe Research downgraded Skyworks Solutions from Outperform to Peer Perform, due to concerns about the company's loss of iPhone content. These are the recent developments that investors should be aware of. The company's financial performance, projected growth, and analyst ratings make Skyworks Solutions a company to watch.
InvestingPro Insights
Recent data from InvestingPro highlights Skyworks Solutions' (NASDAQ:SWKS) financial metrics and market performance, complementing the analyst's positive outlook. The company's market capitalization stands at $17.41 billion, with a Price-to-Earnings (P/E) ratio of 24.32, which adjusts to a more attractive 19.87 when looking at the last twelve months as of Q2 2024. This adjustment suggests a potentially undervalued stock, especially when considering the strong free cash flow yield implied by its valuation, an InvestingPro Tip that aligns with the company's reported robust free cash flow in the third quarter.
While revenues have seen a decrease of 11.41% over the last twelve months as of Q2 2024, Skyworks Solutions boasts a high gross profit margin of 41.19%, indicating efficient operations and cost management. The dividend yield stands at 2.31%, with the company having raised its dividend for 10 consecutive years, a testament to its commitment to shareholder returns, another InvestingPro Tip worth noting.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available, including insights on the company's debt levels, liquidity, and analysts' sales and earnings predictions. To access these tips and make more informed investment decisions, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.