Skyworks: Color on Quarter
- Craig Hallum raises tgt to $100 from $90. Of the top 15 highest operating margins in the semiconductor space SWKS has the 3rd highest operating margins yet one of the lowest P/E's at ~12x FY2017 numbers. They note that ahead of the record iPhone 6 launch SWKS traded at a ~20x P/E. They believe a multiple of 15x-18x is justified, and gets the stock back above $100. Further, they believe a re-rating is already in the works following the strong results and guide in the quarter, as well as ahead of the most widely anticipated iPhone launch in the iPhone 8, and they would be buyers of SWKS.
- Cowen raises tgt to $85 from $80. Broad markets more than made up for Samsung weakness, while AAPL was as expected and guide should quell fears around AAPL/iPhone. They still think BAW sourcing remains a big question mark (would obviously love to see SWKS buy AVGO FBAR) but the model seems largely de-risked. While they believe SWKS will definitely ride the iPhone super-cycle, when push comes to shove, they prefer QRVO.
- Mizuho raises tgt to $85 from $70. SWKS reported an inline DecQ rev/EPS of $914M/$1.61 with a modest revenue beat. SWKS also guided to slightly better than seasonal MarQ with China and GS8 builds, but inventory remains high and GM was down y/y despite better y/y inventories. A stable handset inventory, China and Samsung should be a tailwind for AVGO (Buy), which does not have any of the GM/inventory issues and is seeing good 20% y/y RF growth. Adjusting estimates, maintaining our Neutral rating and raising our SWKS PT to $80 from $75.
- Drexel Hamilton raises tgt to $105 from $90. By the end of CY16, SWKS believes all prior excess handset inventories of last year are finally behind it, so that clean year-over-year growth should continue through the remainder of FY17. They believe SWKS is well positioned to capitalize on the industry's migration to high-performance system-level solutions, as evidenced by its stable to growing market share at Apple, Samsung, Huawei, and the leading Tier-1 Chinese OEMs. While the after-hours move is encouraging, with SWKS trading at just 11.8x their FY18 estimates, they believe the company continues to offer a significantly discounted valuation, particularly when compared to many of its slower-growing chip peers
- Needham raises tgt to $92 from $84 after SWKS delivered beat and raise results in F1Q17 and is already fully booked to its better than expected F2Q17 guidance. The co secured meaningful content gains on Samsung's GS8 (SSNLF) smartphone platform and has now depleted any excess inventory of components at Apple (AAPL). SWKS is leveraging its TC-SAW capability into high-band PADs. Its Broad Markets business is poised for DD Y/Y growth for the foreseeable future driven by increasing demand for connectivity in connected home, IoT and automotive applications. Most importantly, SWKS is positioned to (meaningfully) beat estimates later this year should the iPhone 8 cycle prove as strong as Apple bulls envision.
- SWKS +7.5% at thirteen month high premarket; peers: AVGO +1.5%, QRVO indicated +3%... supplier AAPL +0.3%