Technology

Are iPhone 6 Suppliers Ready for a Sell-Off?

Avago Technologies Ltd. (NYSE: AVGO) rose handily two weeks ago after earnings, and it rose handily last week to new all-time highs. The company said that demand for chips for smartphones should see very strong growth next quarter due to a new phone model and a North American smartphone customer. Presumably that is Apple. Just keep in mind that Avago’s stock price has more than doubled in the past 12 months.

Avago has recently traded at $89.31 and has estimates for its 2014 revenues at $4.25 billion. It has a consensus price target of $91.52, and its 52-week trading range is $36.61 to $89.67, with that new high hit on Monday. Avago’s market cap is more than $22 billion.

InvenSense Inc. (NYSE: INVN) makes micro-electro-mechanical system gyroscopes for motion tracking devices. The chipmaker has been mentioned by numerous sources as an iPhone component supplier. The company also announced a new CFO in late August.

InvenSense shares recently traded at $24.26 and has estimates for its 2014 revenue at $365 million. Its price target is $28.43, and its 52-week trading range is $15.20 to $26.78. The company’s market cap is $2.15 billion, and shares have recently pulled back from highs.

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Nuance Communications Inc. (NASDAQ: NUAN) has said previously that its software was a part of Apple’s Siri audio assistant feature, but Nuance has reportedly been up for sale and has also been under less-insistent activist pressure. It is hard to know if the company will be a winner, particularly as other companies are looking to do whatever they can to have their own audio recognition and speech-to-text effort.

With shares trading at $16.95, the consensus analyst price target on Nuance is $19.00, and the market cap is $5.4 billion. Shares have traded in a 52-week range of $13.00 to $20.01. The consensus annual revenues are projected to be $1.98 billion for 2014 and $2.07 billion for 2015.

NXP Semiconductors N.V. (NASDAQ: NXPI) is said to already make a sensor hub for the iPhone 5s, but the speculation is that payments could be a huge win for the company. The company has recently been trading at $71.15, and it has estimates of its 2014 revenues at $5.58. NXP has a price target of $76.62, and its 52-week trading range is $35.09 to $72.18, with a market cap that is almost $18 billion.

OmniVision Technologies Inc. (NASDAQ: OVTI) makes the sensors that power cameras in smartphones. Despite a drop in the stock after beating earnings expectations, this is only about 1% shy of a 52-week high. Its shares have recently traded at $28.03, and it has estimates for its 2014 revenues of $1.42 billion, with a market cap of $1.6 billion. It has a price target of $27.53, and a 52-week trading range of $13.55 to $28.34.

RF Micro Devices Inc. (NASDAQ: RFMD) designs radio frequency solutions and wireless transceivers. Its shares have risen close to 150% year to date. The company’s shares recently traded at $12.18, and it has estimates for its 2014 revenues at $1.34 billion. It has a price target of $13.09, and its 52-week trading range is $4.50 to $12.98. RF Micro’s market cap is $3.5 billion.

Skyworks Solutions Inc. (NASDAQ: SWKS) is diversified in analog and RF devices, and it is considered a would-be iPhone 6 winner. The stock recently traded at $56.50, and the company has estimates for its 2014 revenues at $2.25 billion. The price target is $60.22, and the shares have a 52-week trading range of $23.27 to $57.18. Skyworks has a market cap of $10.6 billion.

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STMicroelectronics N.V. (NYSE: STM) has reportedly had its accelerometer and gyroscope sensors in various models of the iPhone and iPad in prior years. We do not yet know if it is a winner this time around. Its shares recently have traded at $8.49, and it has estimates for its 2014 revenues at $7.67 billion. The price target is $9.29, and the 52-week trading range is $7.20 to $10.00. STMicroelectronics comes with a $7.5 billion market cap.

Keep in mind that there are many suppliers of various aspects for the iPhone and competing smartphones. The risk is that not all companies will win, and some likely will lose. Another issue to consider is that these other companies may even win the business but do so as Apple squeezes down their operating margins under what was expected.

Stay tuned.