Skyworks Solutions (SWKS) has a very bullish Chaikin Power Gauge rating and reported its 3rd quarter earnings after the close on Thursday July 17th. SWKS had beaten analyst estimates in each of the last 8 quarters and on June 3 raised guidance for the current quarter for both revenue and earnings per share. They estimated $0.80 for the current quarter vs. prior estimates of $0.73. This would have been a 48% jump in EPS year over year.
SWKS actually reported a 54% increase in earnings, coming in at $0.83 vs. their June 3rd upgraded estimate of $0.80.
This bump up in company guidance caused a number of Wall Street analysts to raise their earnings estimates and price targets for SWKS. Needham & Co. analyst N. Quinn Bolton raised his earnings estimate for 2014 to $2.96 vs. $1.83 last year and his 2015 estimate to $3.50. Price targets for the stock were in the 50 - 54 range. 5 Wall Street firms raised their earnings estimates and price targets for SWKS on Friday. Estimates for 2014 are now at $3.15 per share with analysts estimating $3.75 for 2015.
Oppenheimer raised their price target on Skyworks to $65 vs. Friday’s close of $52.87
Skyworks is in the Telecommunications Equipment group but is really a chip manufacturer and is thus included in various Semiconductor ETFs. The Semiconductor Group has been very strong in 2014. Skyworks makes chips for mobile devices including Apple (AAPL) iPhones as well as for Samsung. SWKS is also benefiting from the growing trend toward the interconnectivity of devices, known as the Internet of Things.
Skyworks Solutions has also scored big contracts for analog chips in devices from Medtronic, EchoStar Moto G, Audi and SkyOne. The biggest boost short-term should come from the iPhone 6 which should result in large orders for SWKS.
The stock came off an oversold bottom and triggered a Money Flow buy signal in Chaikin Analytics prior to Thursday’s earnings report. SWKS has the perfect trifecta of a very bullish Chaikin Power Gauge rating, strong Relative Strength to the market and very bullish Chaikin Money Flow.
Skyworks was up 14% on Friday and triggered both a Momentum Breakout and a Relative Strength Buy signal in Chaikin Analytics based on Friday’s explosive price move. Normally a stock has a sideways consolidation of an earnings related breakout like SWKS had on Friday. Buy any pullbacks of 1½ –3% over 1- 3 days in Skyworks as this under-owned stock will continue to lead the Semiconductor group higher.
Skywork’s very bullish Chaikin Power Gauge rating is driven by very bullish price/volume activity as well as increasingly bullish analyst ratings and earnings estimate increases. SWKS is in the very strong Semiconductor group and has a strong earnings record. Financial metrics such as Return on Equity, Free Cash Flow and LT Debt to Equity are also very positive.
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