A new Oppenheimer research report makes the case that investors quickly will focus on Apple vendors, with the forward expectations positive and above forecast. The research report noted this:
We expect the Apple supply chain to react positively, as Apple’s guidance likely implies limited impact from any possible launch/production delays. Within the Apple supply chain, we continue to prefer content increase stories helping insulate from any demand softness versus (lofty) expectations. We conservatively take an agnostic view of end unit demand.
Four of the top Apple vendors are rated Outperform at Oppenheimer.
This stock spiked recently and has come back into a good buy range. Analog Devices Inc. (NASDAQ: ADI) is a leader in the design, manufacture and marketing of analog, mixed-signal and digital signal processing integrated circuits for use in industrial, automotive, consumer and communication markets worldwide. It offers signal processing products that convert, condition and process real-world phenomena, such as temperature, pressure, sound, light, speed and motion, into electrical signals.
The company recently introduced a highly integrated polyphase analog front end with power quality analysis designed to help extend the health and life of industrial equipment while saving developers significant time and cost over custom solutions. Achieving extremely accurate, high-performance power quality monitoring typically requires customized development, which can be expensive and time-consuming.
The analysts believe that the Linear Technology acquisition, which closed recently, is a big positive as it helped raise the level of business done with Apple to 5%. Oppenheimer thinks that the company grew content in the iPhone 7 30% year over year, which bodes well for the iPhone 8 business.
Analog Devices investors receive a 2.28% dividend. The Wall Street consensus price target is $94.10. The stock closed Wednesday at $78.82.
This stock has been on fire over the past year and not only remains a top pick across Wall Street but derives 20% of its business from Apple. Broadcom Ltd. (NASDAQ: AVGO) has an extensive semiconductor product portfolio that addresses applications within the wired infrastructure, wireless communications, enterprise storage and industrial end markets.
Applications for Broadcom’s products in its end markets include data center networking, home connectivity, broadband access, telecommunications equipment, smartphones and base stations, data center servers and storage, factory automation, power generation and alternative energy systems and displays.
Top Wall Street analysts like the leadership in the mobile, data center and broadband markets, and especially in the radio frequency (RF) arena. Many on Wall Street see a cyclical rebound in industrial and communications demand.
The analysts note that the stock is underowned compared to peers, and the 40% iPhone content growth, combined with the closure of the Brocade purchase, which they feel is accretive, are very positive catalysts. They also feel dividend growth is possible.
Broadcom investors receive a 1.65% dividend. The consensus price target is $273.81, and shares closed Wednesday at $253.36.
This stock has been on a roll since last summer. Skyworks Solutions Inc. (NASDAQ: SWKS) designs, develops, manufactures and markets proprietary semiconductor products, including intellectual property worldwide.
The product portfolio includes amplifiers, attenuators, battery chargers, circulators, DC/DC converters, demodulators, detectors, diodes, directional couplers, diversity receive modules, filters, front-end modules, hybrids, LED drivers, low noise amplifiers, mixers, modulators, optocouplers/optoisolators, phase shifters, phase locked loops, power dividers/combiners, receivers, switches, synthesizers, technical ceramics, VCOS/synthesizers and voltage regulators.
The company does a stunning 40% of sales with Apple, which in this case is a positive for shareholders with the guidance for the quarter. The analyst’s report noted:
Skyworks Solutions has traditionally been a primary supplier of RF and analog in the iPhone/iPad. The company’s content has consistently increased ~20% in each of the last three iPhone refreshes, by our checks. We expect 15%+ content increase in the upcoming iPhone 8.
Investors receive a 1.23% dividend. The consensus price objective is $112.92. Shares closed Wednesday at $104.43.
This old-school chip tech company has come back into favor big-time. Texas Instruments Inc. (NASDAQ: TXN) is a broad-based supplier of semiconductor components, ranging from digital signal processors to high-performance analog components to digital light-processing technology and calculators. Some 65% of Texas Instruments sales are exposed to the well-diversified, business-to-business industrial, automotive, communications infrastructure and enterprise markets.
The company increased its quarterly dividend earlier this year by 32% to $0.50 per share, or $2.00 annualized. The increase reflects its continued strength in free cash flow generation and its commitment to return excess cash to shareholders.
Oppenheimer noted that Apple is 10% of sales for the semiconductor giant, and the company provides literally hundreds of SKUs across Apple’s entire product line. The analysts also estimate that the company has a 7% sales exposure to the iPhone.
These four top companies are all big suppliers to Apple in the iPhone space and in other areas of the company’s burgeoning product line. With the iPhone 7s and 7s+ expected to be released in September and the iPhone 8 in October, there should be continued interest in these stocks.