Cirrus Logic and Skyworks downsized at Barclays as ‘expectations from contactless phone’ De Investing.com

Investing.com — Barclays downgraded Cirrus Logic (NASDAQ: ) to Equal Weight and Skyworks Solutions (NASDAQ: ) to Underweight on Thursday, saying handset expectations look overly bullish for next year.

The discount is based on the bank’s revised content assumptions for the iPhone SE4 and iPhone 17 (IP17), with a more modest increase in units expected in 2024.

Barclays analysts pointed out that current market expectations for handset growth appear out of sync with reality.

They noted that consensus calls for a 10% increase in new phone units for next year, while Barclays expects just 5%.

For SWKS, analysts expressed skepticism about the company’s ability to recover lost share in multiple input multiple output (MIMO) sockets, making content growth unlikely.

Barclays also sees both lower unit expectations and content headwinds for the company, particularly in China, where the Android market is becoming increasingly difficult.

Analysts believe the company will face tough conditions over the next six months, with earnings estimates falling below consensus. They forecast earnings per share of $6.42 for SWKS in 2024, compared to The Street’s estimate of $6.72.

As for CRUS, Barclays pointed out that while the company has been a favorite stock in the phone space, the recent rally has left limited upside until it gets clearer on iPhone 18 content earnings.

“CY26 should be another year of strong content growth,” analysts said. However, in the meantime, they believe December’s street numbers are over $20 million too high.

The bank also noted that tailwinds from PCs will not be enough to generate significant growth.

Overall, Barclays suggests that the growth prospects for both CRUS and SWKS are narrower than the market assumes.