Semiconductor stocks were a popular stock option in 2014 as semiconductor companies filled the demand for chips in smartphones. Skyworks Solutions (NASDAQ: SWKS) is one of these companies that profited from their partnership with Apple's (AAPL, Financial) iPhone 6.
Skyworks Solutions last delivered quarterly results on November 6 with record-breaking results. Revenue increased 51% year over year to $718 million while dividend payments increased by 18% to $0.13 a share. The report issued guidance of $770 million for the first quarter of 2015. Despite these impressive results, analysts delivered mixed ratings on the stock.
On December 31, analyst Thomas Diffely of D.A. Davidson reiterated a Buy rating on Skyworks Solutions with a price target of $85. The analyst is looking forward to high revenue and earnings in the next quarter, thanks to high demand. Diffely noted, "There was tremendous growth in the RF demand this year driven by the emerging 4G smartphones in China that ramped from a few million in 2013 to a projected 75 million in 2014." The analyst continued, "Management teams from all of the major U.S.-based radio-frequency players have commented on continued industry strength in recent weeks. The three main drivers continue to be Apple with the success of the iPhone 6, China-related smartphone business and, to a lesser degree, Samsung (SSNLF, Financial). Thus, most radio-frequency (chip) players are poised for record results in the fourth quarter." Diffely is optimistic about industry growth, highlighting the growing popularity of smartphones and the "driving need for integrated multiband systems."
Thomas Diffely has a 85% overall success rate recommending stocks with an average return of +23.1% per recommendation.
However, not everyone is optimistic about the future of the semiconductor industry. Separately on December 29, analyst Quinn Bolton of Needham downgraded SWKS to Hold. The analyst issued a note "forecasting a deceleration in year-over-year revenue" for the industry, and warned that "semiconductor stocks have tended to be more volatile during periods of decelerating revenue growth." Other than decelerated revenue, Bolton's note also warned that "valuation multiples seem unlikely to expand further" and that "consensus estimates already reflect strong enraging growth."
Quinn Bolton has a 69% overall success rate recommending stocks with a +22.7% average return per recommendation.
The top analyst consensus for SWKS on TipRanks is Moderate Buy.
Sarah Roden writes about stock market news. She can be reached at [email protected]
