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Wall Street analysts believe weaker than expected iPhone demand is hurting
The wireless chip maker’s stock was down 8.6% to $76.25 on Friday, after it gave a December quarter sales guidance range of $1.01 billion at the midpoint versus $1.07 billion Wall Street consensus, according to FactSet.
D.A. Davidson analyst Thomas Diffely lowered his price target for Skyworks stock to $115 from $125, pointing to a lower iPhone sales forecast than he expected.
“We are trimming our 2019 model due to a more conservative stance on iPhone units and China over the next couple of quarters,” he wrote Friday. “High-end smartphone unit softness and geopolitical uncertainty continues to be an overhang for SWKS and its peers.”
The company makes radio frequency semiconductors, which enable smartphones to communicate with wireless networks. It is widely believed by industry analysts that
is Skyworks’ large customer, accounting for 35% to 40% of its annual revenue.
Despite the company’s short-term troubles, Diffely reiterated his Buy rating for Skyworks due to the opportunity from 5G. He believes the fifth generation wireless technology will drive several years of growth for the company.
KeyBanc Capital Markets analyst John Vinh also reduced his price forecast to $100 from $120 for the chip maker.
Skyworks’ “content growth [is] not enough to overcome softness in China and Apple smartphone demand,” he wrote on Thursday. “Despite lowered results, we recommend investors continue to own SWKS, as we see sustained revenue and earnings growth driven by secular RF content gains, especially as 5G begins to ramp 2H19.”
Vinh reaffirmed his Overweight rating for the stock.
The company’s stock is now down nearly 20% this year versus the S&P 500’s 4% return.