Skyworks sinks on earnings as outlook remains tethered to Apple

Skyworks Solutions (NASDAQ:SWKS) shares slid about 6% lower during Wednesday morning trading, as the company is dependent in large part on the success of Apple (NASDAQ:AAPL) Intelligence and the iPhone.

“With total Android exposure comparatively small at less than $100M a quarter, this mobile story continues to be dictated by Apple, whose revenue for September was 69% of total revenue and expected to grow 5-10% sequentially in December,” said Morgan Stanley analysts, led by Joseph Moore, in an investor note.

Skyworks reported their fourth quarter fiscal 2024 financial report and first quarter fiscal 2025 outlook post-market on Tuesday. Skyworks CEO Liam Griffin said they expect AI “to ignite a transformative smartphone upgrade cycle.”

Morgan Stanley maintained its Equal-weight rating on the stock, but lowered the price target to $87 from $117.

“While Skyworks cannot speak to Apple’s future roadmap in detail, there is a long-term opportunity for them to take share from Qualcomm (NASDAQ:QCOM) if/when Apple develops an internal baseband,” Moore added. “iPhone 17 content is still being decided, but Skyworks feels confident in the capabilities after some content loss in the 16.”

Skyworks produces analog and mixed-signal chips. This includes radio frequency chips, which it primarily makes for Apple. It also produces chips for Android phones, such as Google (GOOG)(GOOGL) and Samsung (OTCPK:SSNLF), but these comprise a much lower portion of its total revenue. It creates chips for other industries as well, including automotive and networking.

“We view Skyworks as a major beneficiary of the expected AI smartphone upgrade cycle in 2025,” said Needham analysts, led by Nick Doyle, in a Wednesday investor note. “However, we are Hold rated given Skywork’s blended content at their large customer (Apple is 65-70% of total revenue) has moved materially lower in CY24 models. Given uncertainty surrounding share gains (content growth) for CY25 models, we remain on the sidelines.”

Meanwhile, Bank of America Research reiterated its Underperform rating on the stock and lowered its price objective to $88 from $110.

“If AI-phones were to ultimately gain traction, it could catalyze a prolonged upgrade cycle where SWKS may benefit from units upside and better content as these devices likely require higher RF complexity with sophisticated packaging/integration needs,” said BofA analysts, led by Vivek Arya, in a note.

Competitors Qorvo and Qualcomm were down less than 1% on Wednesday morning.