Earnings Preview: Did TriQuint Deserve a 35% Climb?

The smartphone wars rage like wildfires, and investors are scratching their heads over how to tap into this dynamic market. Do you buy Apple (NAS: AAPL) and hope for another decade of marketing and design innovation? Do you grab Google (NAS: GOOG) on the strength of its exploding Android platform? Or, do you go the middle road and invest in a chip stock that serves both sides of that legendary conflict with equal verve?

If you hang out in the platform-neutral camp, you're probably biting your nails over the upcoming report from TriQuint Semiconductor (NAS: TQNT) The radio-chip designer unveils fourth-quarter results after Wednesday's closing bell. The smartphone market has never looked hotter, but TriQuint shares have already soared 35% in the new year. Are these prices crazy or sustainable?

The average Wall Street analyst thinks TriQuint is priced about right. The average recommendation is a hold with a $6.50 price target -- just below today's levels. These firms expect earnings of about $0.07 per share, down from $0.25 a year ago and on 13.5% lower sales.

The estimates haven't changed in the last 90 days, despite a tremendous holiday season for both Android and iPhone sales. Apple in particular showed record-level iPhone 4S sales and that model includes two separate TriQuint chips. Therefore, chances are that the static sales estimates will be a bit low. The company likes to see its factories humming along at high volumes, so strong sales should be good for margins as well.

In short, TriQuint seems set up to beat analyst expectations across the board. Shares are priced right where the same target-building analysts expect them. Shares should jump on this announcement based on the underlying market assumptions.

If so, I may have picked the worst possible time to issue an underperform CAPScall on TriQuint back in December. At the time, TriQuint had recently missed a few earnings targets and looked like it labored under execution problems.

The proof is always in the actual pudding, though. Maybe TriQuint continued to lose market share to longtime rival Skyworks Solutions (NAS: SWKS) and upstart Avago Technologies (NAS: AVGO) . In that case, my execution worries would prove to be on target in a long-term way -- Apple's market-beating power counting for naught and TriQuint shares sliding. This could certainly happen. That's why I'm not changing that bearish CAPScall today and don't suggest that you take drastic action, either.

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At the time thisarticle was published Fool contributorAnders Bylundowns shares of Google but holds no other position in any of the companies mentioned. The Motley Fool owns shares of TriQuint Semiconductor, Google, and Apple.Motley Fool newsletter serviceshave recommended buying shares of Google and Apple.Motley Fool newsletter serviceshave recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check outAnders' holdings and bio, or follow him onTwitterandGoogle+. We have adisclosure policy.

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