The world has had its share of great health and civil concerns in 2020, but consumers are still quite eager to get 5G finally rolled out. Investors have been focused on many of the potential 5G winners, and one company in that mix has been Skyworks Solutions Inc. (NASDAQ: SWKS). Independent research firm Argus has keyed on its prospects with much higher upside potential than most of Wall Street expects.
Argus reiterated its Buy rating and raised its price target to $146 from $112. That is handily above the consensus analyst price target of $119.13, and it is still more than 10% upside from the current price.
While Argus provides independent research and is free from any traditional conflicts of interest, 24/7 Wall St. would again remind readers that no single analyst report should ever be used as the sole basis for deciding to buy or sell a stock.
The report considers Skyworks well positioned in its mobile solutions business as the 5G device launch season approaches this fall. Argus also sees Skyworks generating sequential momentum in its broader markets business, and the easing of restrictions on doing business with Huawei also may help the company. All in all, Argus sees revenue growth supporting margin expansion.
One issue that Argus did bring up, and the reason for not even more upside, is that the firm had upgraded its rating from under $90. The key here is the Apple Inc. (NASDAQ: AAPL) 5G iPhone launch (the iPhone 12, that is), which is now expected in late 2020. The report also noted that a teardown analysis of recent models (including iPhone 11) shows that Skyworks has a strong presence and the firm expects that it will grow its so-called dollar share per device.
While the growth will start at some point in the fourth quarter, Argus really sees a strong 5G device cycle picking up into 2021.
Skyworks has not been immune to the woes of the world. In its last report, the company posted a 5% decline in sales and a 9% decline in earnings per share. The company also joined the rank and file of other companies by withdrawing its guidance due to so much uncertainty, and it was cautious about the coming quarter with disruptions in the demand side of the equation and disruptions in the supply chain.
The key point here for additional upside is that Skyworks’ market position and customer relations are intact and the company is positioned to win with the global demand recovery that is expected in the coming quarters.
Given the report, and keeping some of the cautious aspects that the great recovery has been seen, note that Skyworks easily could have been included in the top stocks to win on 5G.
While the ties of the recent share performance may be owed to Apple, Argus sees Skyworks as attractive. Not all investors agree on 5G’s upside, and a top carrier saw its shares suffer under attacks on its 5G. Another view showed how Apple will benefit from the 5G wave.
Shares of Skyworks were trading down 0.8% at $129.75 on Thursday morning, and its 52-week range is $67.90 to $138.22.