Pacific Crest analyst Michael McConnell weighed in today on wireless chip maker Skyworks Solutions Inc (NASDAQ:SWKS), explaining why he believes that the company should acquire or merge with Maxim Integrated (NASDAQ:MXIM). The analyst also reiterated an Overweight rating on the stock, with a price target of $100.
McConnell wrote, “We believe SWKS should acquire/merge with MXIM, as it would provide Skyworks with compelling long-term diversification away from mobile into data center and automotive end-markets. Assuming a stock and debt deal, we estimate that, at current levels, this would support C2017 EPS of $7.51 and fair value of $130 vs. our current price target of $100.”
“We see a corporate fit in SWKS acquiring MXIM, given (1) Skyworks’ prior experience and success in HPMS given its acquisition of Advance Analogic (AATI) in 2011, (2) common core competencies in developing power management ICs (PMICs),” the analyst continued,
McConnell concluded, “Strategically, we believe the acquisition of MXIM would make the most sense and be the most transformational. However, we also believe that other potential acquisitions, such as MTSI and SLAB, would also make sense.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael McConnell has a total average return of 5.2% and a 64.9% success rate. McConnell has a average return when recommending SWKS, and is ranked #866 out of 3840 analysts. Out of the 20 analysts polled by TipRanks, 18 rate Skyworks Solutions stock a Buy, while 2 rate the stock a Hold. With a return potential of 29.7%, the stock’s consensus target price stands at $100.94.