Why Skyworks Solutions' Shares Popped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of wireless-connectivity chip maker Skyworks Solutions (NAS: SWKS) headed higher by as much as 12% earlier in the trading session after reporting better-than-expected third-quarter results.
So what: For the quarter, Skyworks reported a 9.2% increase in revenue to $389 million and a profit of $0.45 that was spurred by strong growth in smartphone and tablet demand -- most notably, Apple's (NAS: AAPL) iPhone 4S, which sold 35.1 million units last quarter. These results slid past Wall Street's expectations for $383.2 million in sales and a profit of $0.44. Skyworks' guidance for the fourth quarter calls for accelerating revenue growth and EPS of $0.50 to $0.51, which is more or less in line with the $0.51 the Street was looking for. Investment firm Stern Agee also upgraded the company to buy from neutral this morning and set a price target of $31.
Now what: OK, Skyworks shareholders, get those thank-you cards written and start mailing them to Cupertino! Skyworks really finds itself in the sweet spot of mobile growth. Demand for smartphones and tablets is rising dramatically, and prices for these items are generally falling as markets become more saturated. As these prices fall, sales are likely to head higher as affordability no longer becomes an issue, meaning even more sales for Skyworks. Make no mistake, even with today's move higher, Skyworks could still represent an excellent value.
Craving more input? Start by adding Skyworks Solutions to your free and personalized Watchlist so you can keep up on the latest news with the company.
At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of, and creating a bull call spread in, Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.