Canaccord analyst Michael Walkley came out today with a few insights on the technology giant Apple Inc. (NASDAQ:AAPL) and semiconductor company Skyworks Solutions Inc (NASDAQ:SWKS). The analyst lowered estimates and price targets for both stocks, as he anticipates softer 1H/C2016 iPhone and overall smartphone sales.
According to TipRanks, Walkley is one of the top analysts on Wall Street covering technology. His picks average a 14 percent one-year return, and he is ranked in the top 10 percent of all analysts.
Walkley reiterated a Buy rating on shares of Apple, while reducing the price target to $146 (from $160), given weak trends from suppliers into iPhones and flat to slightly down global Q4/2015 smartphones sales. The analyst lowered his 2016 iPhone estimates from 231M units to 219M units.
Walkley wrote, “Based on our survey work and analysis, we believe Apple is maintaining strong share of the premium tier smartphone market. However, given the similar form factor for the iPhone 6S and softer smartphone global demand trends, we anticipate weaker and down year-over-year 1H/C2016 iPhone sales. While we still anticipate the iPhone installed base reached approximately 500M exiting C2015, we anticipate a slower upgrade cycle in 1H2016 given macro weakness and potential for consumers to delay purchases in anticipation of the iPhone 7.”
“With only 31% of the iPhone installed base having upgraded to the iPhone 6/6 Plus devices by Q4/F’15 combined with the strong installed base around half a billion consumers, we anticipate solid long-term iPhone sales following potentially down year-over-year sales during 1H/ C2016. We believe the iPhone installed base of roughly 500M exiting C2015 should drive strong future iPhone replacement sales, earnings, as well as cash flow generation to fund strong long-term capital returns programs,” the analyst continued.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael Walkley has a 23.2% average return when recommending AAPL, and is ranked #26 out of 3630 analysts.
Out of the 32 analysts polled by TipRanks in the last 3 months, 25 rate Apple stock a Buy, while 7 rate the stock a Hold. With a return potential of 49.67%, the stock’s consensus target price stands at $144.36.
Skyworks Solutions Inc
Walkley maintained a Buy rating on shares of Skyworks Solutions, while lowering the price target to $110 (from $120), due to his lowered global smartphone forecasts.
Walkley stated, “We believe reduced orders from Apple near the end of the December quarter combined with ongoing weak global smartphone sales trends could create a greater than normal seasonal decline for Skyworks in the March quarter.”
Furhtermore, “We now anticipate March quarter sales could decline 14% sequentially versus our previous 8% estimate. While a softer 1H/C2016 smartphone market could limit near-term results and guidance relative to consensus, we believe Skyworks is positioned for healthy long-term growth trends. We believe Skyworks’ broad portfolio of custom integrated solutions should enable dollar content share growth in Apple’s and Samsung’s premium tier smartphones and grow content share in the fast growing Chinese LTE smartphone market. We also believe Skyworks’ diverse analog portfolio positions its broad market division for 20% plus annual growth driven by content share in markets such as 802.11ac, wireless infrastructure, and the IoT market.”
According to TipRanks.com, Walkley has a 38.4% average return when recommending SWKS.