Skyworks(SWKS) ZACKS·2024-12-30 18:01Market Outlook and Trends - Skyworks maintains a long-term bullish outlook on the broader market, supported by secular trends in edge IoT, automotive electrification, advanced security systems, and AI-driven workloads [1] - The global mobile data use, especially for 5G, is expected to triple in the next three years By 2029, 39 billion IoT connections, including connected cars and devices, are anticipated [12] Financial Performance - Skyworks' fiscal fourth-quarter performance suffered from high inventory levels, uneven demand across segments, and muted global demand in automotive and industrial markets [5] - Skyworks' revenues declined 15.9% year over year in the quarter, whereas non-GAAP earnings plunged 29.5% [14] - For the first quarter of fiscal 2025, Skyworks expects revenues between 1.08 billion Non-GAAP diluted shares are expected to be 1.07 billion, reflecting an 11.4% year-over-year decline [13] - The consensus mark for fiscal 2025 earnings has been revised downward by 4 cents over the past 60 days to 6.27 per share [16] Competitive Landscape - Skyworks shares have lost 5.6% over the past three months, underperforming the broader Zacks Computer and Technology sector and its competitor Broadcom (AVGO), which offers a wider range of semiconductor solutions While the sector has gained 9.7% over the past three months, the Broadcom stock has soared 44.3% [4] - Challenges in wireless infrastructure and traditional data center end markets are expected to continue hurting Skyworks' financial performance in the near term Stiff competition from players like Broadcom, Qorvo, and Cirrus Logic is expected to increase pricing pressure in the market and affect margins [10] Product and Technology - The company is experiencing improved demand as customers adopt Wi-Fi 6E and 7 systems, which offer higher dollar content due to increased complexity and additional bands With Wi-Fi 7 shipments gaining momentum, the industry is entering the early phases of a multi-year upgrade cycle [6] - Skyworks is partnering with mobile customers to create efficient connectivity solutions Mobile revenues grew 21% sequentially, and the company expects continued growth in the December-end quarter, with normalized orders, inventory, and seasonal product ramps [7] - Skyworks boasts a robust portfolio, including amplifiers, antenna tuners, DC/DC converters, detectors, diodes, ProSLIC, and voltage-controlled oscillators These key components position the company to capitalize on growing demand across wireless connectivity, IoT, automotive, and data centers, offering strong prospects for growth and innovation [17] Valuation and Ranking - SWKS's Value Score of C indicates a stretched valuation at this moment It currently has a Zacks Rank 4 (Sell), which implies that investors should stay away from the stock for the time being [11]