Shares of Skyworks Solutions (SWKS) are trading lower, here’s why

What happened:

Shares of wireless chip maker Skyworks Solutions (NASDAQ: SWKS ) fell 6.3% in the morning session, after stocks of semiconductor companies that design chips used in smartphones fell after Wall Street analysts expressed concern about the delivery time of iPhone 16 Pro models compared to previous models. year.

Adding to the signs of weak demand, TF Securities analyst Ming-Chi Kuo added that “demand for the new iPhone 16 is lower than expected – and a 12% year-over-year decline from first-weekend sales of the iPhone 15 last year”. Concerns raised by the analyst include intense competition in the Chinese market and the unavailability of Apple Intelligence (a major selling point) during the iPhone 16 launch.

Apple shares fell 3% on the reports, suggesting potential vulnerabilities in the coming quarters. In particular, weak demand for the iPhone 16 could translate into lower production volumes, which could in turn inform the decision to reduce demand for components like chips, potentially causing a slowdown for semiconductor companies that provides these inputs.

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What the market tells us:

Skyworks Solutions shares are somewhat volatile and have had 4 moves of more than 5% in the past year. Against that background, today’s move indicates that the market sees this news as significant, but not something that would fundamentally change its perception of the business.

The biggest move I wrote about in the past year was 5 months ago, when the stock fell 14.9% on news that the company reported first-quarter results: its free cash flow missed and revenue and EPS guidance for the next quarter fell short. of analysts’ expectations.

Management attributed the weaker outlook to an anticipated decline in its mobile business as it disposed of excess inventory. One conclusion was that the company announced a dividend of $0.68 per share.

Overall, this was a difficult quarter for Skyworks Solutions. Following the results, analyst TD Cowen downgraded the stock from Buy to Hold and lowered its price target from $125 to $90.

The analyst added: “We remain encouraged by Skyworks’ efforts to strategically position the business following a recent challenging macro environment, but we see a loss of around 10% which may or may not be temporary, as much to overcome.”

Skyworks Solutions is down 12.2% year-to-date and at $95.79 a share trades 20.6% below its 52-week high of $120.68 dated July 2024. Investors who bought the stock Skyworks Solutions worth $1,000 5 years ago would now be Looking at an investment worth $1,168.

The story continues

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