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Cirrus Logic and Skyworks Downgraded by Barclays Due to Misaligned Handset Expectations

Barclays has downgraded Cirrus Logic and Skyworks Solutions, citing overly optimistic expectations for handset sales in the upcoming year. The bank has shifted Cirrus Logic to an Equal Weight rating and Skyworks Solutions to Underweight as it revises its projections for iPhone models, notably the iPhone SE4 and iPhone 17, anticipating more modest unit growth in 2024.

Analysts at Barclays pointed out a disconnect between current market expectations and actual growth prospects, noting a consensus forecast of a 10% increase in new phone units, while their estimate stands at only 5%.

For Skyworks Solutions, the analysts expressed doubts about the company’s ability to regain lost market share in multiple-input multiple-output (MIMO) sockets, which they believe makes a content uplift unrealistic. They also referenced challenges in the Android market, particularly in China, that could impact the company’s performance.

Barclays forecasts a challenging environment for Skyworks Solutions over the next six months, with expected earnings per share of $6.42 for 2024, which is below the consensus estimate of $6.72.

As for Cirrus Logic, while the company has been a favored choice in the handset sector, analysts noted that recent stock rally has limited potential gains until there is more clarity on content improvements for the iPhone 18. They anticipate that while the year CY26 should see strong content growth, current estimates for December are potentially overstated by more than $20 million.

Overall, Barclays conveys a more constrained growth outlook for both Cirrus Logic and Skyworks Solutions than what the market currently assumes.

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