Can Skyworks Keep Up Its Robust Stock Performance?

By Chris Lange Published Mar 30, 11:35AM EDT

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Skyworks Solutions Inc. has been one of the outright best performing S&P 500 stocks so far in 2015. Even farther back, over the past year, the stock has in fact grown about 170%. The question to ask is whether that growth is expected to remain or to slow. Analysts across the board are incredibly bullish on Skyworks, and the company is experiencing rapid earnings and revenue growth. Still, can Skyworks keep running ever higher?

Basically, Skyworks is an innovator of high-performance analog semiconductors. Leveraging core technologies, Skyworks supports automotive, broadband, wireless infrastructure, energy management, GPS, industrial, medical, military, wireless networking, smartphone and tablet applications. Previously, the company announced that it is ramping front-end modules, wireless connectivity switches, power amplifiers, low noise amplifiers and power management solutions for streaming media and smart TV applications supporting OEMs such as Roku, Google, Amazon and Samsung. RBC highlighted that Skyworks would have a strong 2015 ahead of it due to its focus.

The theme here is that Skyworks has very little exposure to the personal computing-market and deals more with the Internet of Things (IoT). This has partially played to the company’s favor as it has not been hurt by the fall in PCs.

The Merrill Lynch team is very bullish on the stock, as evidenced by the much higher earnings estimates the firm has for 2016. The analyst is at $5.98 per share for the year, versus Wall Street’s $5.65. Merrill Lynch explains this meteoric growth by pointing to the new product pipeline and content, which include the highly anticipated Samsung Galaxy S6 and Apple Watch.

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The Merrill Lynch analysts also feel the company has solid merger and acquisition possibilities, as Skyworks boasts a very strong and unlevered balance sheet and outstanding operational capabilities.

Northland Securities recently raised its price target to $105, and the highest analyst target out there is all the way up at $117. Skyworks trades at 20 times expected 2015 earnings. Interestingly enough, Skyworks just recently was moved up from the S&P Mid-Cap 400 to replace PetSmart in the S&P 500.

What has been keeping this stock running over the past year is the ongoing upward trend of the IoT. Skyworks has been able to capitalize and supply semiconductors to major players in this field. To continue this run, Skyworks needs to keep supplying to these major producers and keep its eyes open on whatever new products in the IoT could come other companies’ pipelines.

What sort of growth is expected? Thomson Reuters has the 2015 consensus estimates at $4.90 in earnings per share (EPS) and $3.18 billion in revenues. If those come about, it would represent growth from $3.24 per share in 2014 on nearly a 39% gain in revenues. For 2016, analysts are calling for EPS of $5.54 and almost 11% revenue growth to $3.53 billion.

Skyworks also appears to have beaten its EPS estimates for at least four quarters in a row. Another issue some investors will want to consider is that Skyworks has a market cap of $19 billion.

Shares of Skyworks were up almost 1.5% at $100.31 Monday morning, likely with the broad market rise on the day. The stock has a consensus analyst price target of $97.71 and a 52-week trading range of $34.30 to $102.77.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.