On Wednesday, Skyworks Solutions (NASDAQ:SWKS) saw its stock price target reduced by Piper Sandler from the previous $95.00 to $85.00, while the firm retained a Neutral rating on the stock.
The adjustment follows the company's report of its September quarter results, which marginally surpassed expectations, but its guidance for December fell short of Wall Street forecasts. The shortfall was primarily attributed to a broad market weakness, with specific challenges arising from inventory build-ups in certain sectors, notably automotive and industrial.
Skyworks' handset business has been performing in line with projections, continuing to gradually shift its revenue focus towards its largest customer and reducing its reliance on Chinese clients. Despite the current market challenges, the company is actively investing in its operations, aiming to expand its presence in major handset models by securing larger sockets. These strategic investments are anticipated to continue through fiscal year 2025.
However, these investments are also expected to impact the company's earnings per share (EPS), as reflected in Piper Sandler's revised estimates. While acknowledging Skyworks' solid execution, the firm expressed caution due to the immediate obstacles that the company faces within its business model.
Piper Sandler's stance remains neutral, emphasizing the potential of Skyworks' long-term strategy but also recognizing the current headwinds that could affect its near-term performance. The revised price target of $85.00 reflects these considerations, as the firm awaits clearer signs of improvement in the broader market and within Skyworks' specific business segments.
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