Skyworks Solutions slips as Wells Fargo downgrades on worries over slowing 5G growth
Michael Vi

Skyworks Solutions (NASDAQ:SWKS) fell 2% on Tuesday as Wells Fargo downgraded the semiconductor company, noting worries over slowing 5G handset growth.
Analyst Gary Mobley lowered his rating on Skyworks Solutions (SWKS) to equal weight from overweight, while also cutting the price target to $95 from $130. Mobley pointed out that in a slowing 5G environment, it's unlikely investors will move back to companies in the RF front-end space.
"In fact, over just the past six months, we believe there has been a rotation in each company's shareholder base whereby deep value investors have taken an interest in the companies," Mobley wrote in a note to clients, while also discussing the firm's downgrade of Qorvo (QRVO).
Mobley lowered his revenue and earnings estimates for 2023 and 2024 for Skyworks (SWKS). He now expects the company to earn $11.25 per share and generate $5.56B in revenue in 2023 and $11.74 per share and $5.76B in 2024, down from prior views of $11.84 in EPS and $5.79B and $12.38 EPS and $6B, respectively.
The analyst added that the downgrade came before investor sentiment gets "more positive" and there are signs of the chip cycle hitting a bottom.
Skyworks (SWKS) generates more than half of its total revenue from Apple (AAPL) and it's likely that companies with outsized exposure "will continue to trade at a large discount to peers," given the smartphone market is not a growth industry and companies require on increased content for growth. 
Late last month, Bank of America cut its iPhone sales estimates and said Skyworks Solutions (SWKS) would be among the companies most likely to be impacted.
Analysts are largely positive on Skyworks Solutions (SWKS). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates SWKS a HOLD.