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Skyworks Shares Fall Despite Earnings Beat. Investors Wanted More.

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Shares of

Skyworks Solutions

are trading sharply lower Friday despite reporting better-than-expected results for the March quarter and solid guidance for the June quarter. Some investors apparently were hoping for a bigger earnings beat from the provider of mobile radio chips given this week’s report of better-than-expected sales for the Apple iPhone. Apple is the company’s largest customer.

Skyworks Solutions

(ticker: SWKS) reported fourth quarter revenue of $1.17 billion, up 53% from a year ago, and slightly ahead of the Street consensus at $1.15 billion. Non-GAAP profits of $2.37 a share were two pennies ahead of the Street. On a GAAP basis, the company earned $1.95 aa share.

That’s not bad performance, but it pales compared with the December quarter, when Skyworks beat its own guidance by about 50%, driven by strong demand for components for the Apple iPhone 12.

For the June quarter, Skyworks is projecting revenue of $1.075 billion to $1.125 billion; at the midpoint, that is $1.1 billion, which would be up 48%, and ahead of the Street consensus at $1.07 billion. The company sees non-GAAP profits of $2.13 a share, three cents ahead of the Street consensus estimate.

While the stock is lower, the Street is generally supportive. 

Barclays analyst Blayne Curtis, who has an Equal Weight rating on the stock, writes that the quarter was “not entirely a bad print, but after such a large beat in December, it’s a little surprising there was no more gas left in the tank.” But he adds that the company still sees further gains at Apple, which “bodes well with fairly healthy wireless trends.” He estimates that the company’s Apple revenue was down 45% from the December quarter.

In a similar vein, Susquehanna Financial Group analyst
Christopher Rolland
noted that after Skyworks three months ago posted “one of the greatest semi beats in recent memory … this modest beat-and-raise almost looks like a miss in contrast.” He adds that Skyworks has “one of the best 5G stories” in the chip sector, but keeps his Neutral rating to await a better entry point.

Raymond James analyst
Chris Caso
keeps his Outperform rating, while lifting his target price to $220, from $205. Caso notes that the action in Skyworks shares suggests investors weren’t sufficiently impressed with guidance,” but he adds that he thinks second half estimates are “simply too low” given likely iPhone unit growth, and says he is “confident to buy on any weakness.”

Skyworks shares are down 8.2%, to $181.71; shares of rival

Qorvo

(QRVO) are down 4.4%, to $190.86.

Write to Eric J. Savitz at [email protected]

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