Analyst Note| Brian Colello, CPA |
Narrow-moat Skyworks Solutions reported monster fiscal first-quarter results, significantly surpassing its revenue and profitability estimates with 69% year over year growth, thanks to a strong Apple iPhone 12 upgrade cycle and, more important, greater 5G radio frequency content per iPhone. Further, Skyworks’ achieved outstanding growth in non-smartphone markets as more and more devices incorporate wireless connectivity via either cellular or WiFi signals. The company’s forecast for the March quarter (50% year-over-year growth) suggests that these content gains are here to stay, as management also dismissed concerns about demand pull-in or inventory stockpiling. We raise our fair value estimate to $176 from $140 based on revenue well ahead of our prior expectations. Shares rose as much as 15% after hours to the $184 range, but we think the move is justified and we view shares as fairly valued.