After attending the Mobile World Congress in Barcelona, Michael Walkley of Canaccord weighed in on Nokia Corporation (ADR) (NYSE:NOK) and Skyworks Solutions Inc (NASDAQ:SWKS). The Mobile World Congress provides a stage for tech giants to showcase their innovations and gives analysts an acute sense of industry happenings. After attending the conference, Walkley explains why he remains neutral on Nokia but bullish on Skyworks.

Walkley stats

Nokia Corporation (ADR)

Walkley met with Nokia’s Chief Innovation and Operating officer, Marc Rouanne, at MWC. Walkley explains that although he is impressed with the company’s “cogent” plan to integrate Alcatel-Lucent as it will “create a strong technology leadership culture while also meeting the €900M cost synergy target by 2018,” he remains cautious on the company due to macro conditions.

Walkley elaborates on the Alcatel Lucent deal, noting, “With a challenging macro backdrop possible for the next several years and particularly in the wireless infrastructure market after years of strong global LTE investments, we believe cost synergies will remain a primary driver of earnings growth.” The analyst is confident that Nokia will meet its synergy goals and believes the company is moving quickly towards optimization. Walkley acknowledges that product quality and R&D roadmap will remain an important focus for the company, but he is “encouraged” to see that Nokia is “taking a leadership position in 5G technologies. He explains, “While we believe 5G is still several years from meaningful commercial volumes, we believe the new combined Nokia has the assets and people to emerge as the leader in 5G.”

Despite this long-term potential, the analyst reminds investors that carrier network spending trends are still a challenge. Walkley explains, “carrier network coverage spending trends will remain soft y/y during 2016 and transition to more of a capacity spending mix with upcoming carrier aggregation implementations in China.”

Due to this challenging macro environment, Walkley reiterates a Hold rating on Noka with a $6.50 price target. According to TipRanks, 7 analysts are bullish on Nokia while 3 remain on the sidelines. The average 12-month price target between these 10 analysts is $10.33, marking a 71% potential upside from current levels.

Skyworks Solutions Inc

Walkley left the MWC quite optimistic on Skyworks Solutions after meeting with company management and gaining insight into the company’s growth trends. He explains, “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.”

Specifically, the analyst points to RF TAM chips, adding that this segment should grow 11% in 2016 and 13% in 2017. Walkley explains that he expects “muted” RF TAM growth in the first half of the year due to weak iPhone sales. However, the modest growth will be attributed to “the mix of LTE smartphones in the low- to mid-tier smartphone markets increasing in RF $ content.” Furthermore, the analyst points to “positive mix shift” in China that will help drive RF TAM growth in 2016. He explains, “the global mix shift from 3G to LTE smartphones combined with the Chinese smartphone increased mix of 5/6-mode and carrier aggregation smartphones will drive high-single-digit RF TAM growth in 1H/2016 and help offset the weak premium tier smartphones.”

Walkley reiterates a Buy rating on Skyworks Solutions with a $105 price target thanks to the company’s diverse portfolio and array of integrated solutions. According to TipRanks, all 12 analysts who have rated the stock in the last 12 months are bullish with an average 12-month price target of $92.44, marking a 39% potential upside from current levels.