Canaccord top analyst Michael Walkley is out with research reports on shares of Broadcom Ltd (NASDAQ:AVGO) and Skyworks Solutions Inc (NASDAQ:SWKS) following a study of initial iPhone 7/7 Plus numbers and conversations with experts in the industry. The results are in: Walkley believes the wireless chip makers have only benefited from Apple’s newest smartphone launch, noting a significant jump in leading dollar content in contrast to the iPhone 6S/6S Plus models.
As such, the analyst reiterates a Buy rating on AVGO with a price target of $215, which represents a nearly 28% increase from where the shares last closed. Additionally, Walkley also remains bullish on SWKS, reiterating a Buy rating with a $92 price target, which represents a nearly 22% increase from where the stock is currently trading.
Particularly on back of rival Samsung’s hurdles with the Galaxy Note 7 recall, Walkley finds Apple’s iPhone 7 in an ideal position to enter “holiday season to gain market share.” In turn, the analyst believes this only benefits both AVGO and SWKS further with their “strong RF $-content,” estimating an increase in AVGO to from $6.00 to around $8.00 and improved content in SKWS from $5.50 to around $6.00 in the iPhone 6S.
In regards to AVGO, Walkley contends, “Longer term, we believe management will continue to execute and achieve synergy targets given their strong track record of integrating acquisitions. We believe Broadcom is a leading global diversified semiconductor company with a broad portfolio of category-leading products and a leading customer base addressing the wireless and wired infrastructure, enterprise and data center networking and storage, IP traffic routing, and industrial verticals. Recently issued strong Q4/F16 guidance also supports our thesis the company is positioned for solid long-term sales and earnings growth with industry-leading margins.”
Whereas for Skyworks, “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 double-digit annual growth driven by content share in markets such as 802.11ac, automotive, and the IoT markets,” the analyst concludes.
As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, top five-star analyst Michael Walkley has achieved a high ranking of #24 out of 4,172 analysts. Walkley upholds a 61% success rate and yields 14.7% in his yearly returns. When recommending AVGO, Walkley realizes 49.0% in average profits on the stock. When recommending SWKS, Walkley gains 35.6% in average profits on the stock.