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Skyworks Banks on Growing Clout of Connectivity Offerings

Zacks Equity Research

Skyworks Solutions SWKS is riding on traction received by its latest connectivity solutions that support Wi-Fi 6 (802.11ax) devices.

The company’s Wi-Fi 6 portfolio comprises front-end modules with low-noise amplifiers and high power WLAN power amplifiers.

Skyworks’ Wi-Fi 6 compliant advanced connectivity portfolio offers enhanced thermal management with low power consumption and high performance capabilities. Further, the solutions are embedded with logarithmic power detector that facilitates range detection.

Robust features of Wi-Fi 6 compliant solutions are boosting adoption, which is expected to boost the top line in the days ahead.

In fact, Skyworks Wi-Fi 6 solutions are enabling notable companies to offer mesh network and connected home devices. The solutions have facilitated Asus, Arris, Netgear, Ruckus, D-Link, and TP-Link to launch new products and reduce time-to-market.

Coming to price performance, shares of Skyworks have returned 22.4% year to date compared with the industry’s rally of 20.7%.

Compliance With Latest Wi-Fi 6 Augurs Well

Wi-Fi 6, the latest 802.11 wireless standard, offers 30% faster network speed over 802.11ac (Wi-Fi 5).

Rapid proliferation of IoT, increasing popularity of smart connected devices and growing adoption of cloud computing are fueling the demand for an efficient network support infrastructure.

Skyworks’ efforts to roll out robust modules to enhance performance in the latest connected devices with support to latest wireless standards, bodes well in the long haul.

Per ABI Research data, as revealed by Skyworks, shipments of Wi-Fi 6 chipsets are projected to hit 2 billion units by 2024 from estimated 127 million units in 2019 at a CAGR of approximately 73%. The growth projection reinforces the company's business prospects in the domain.

Wrapping Up

Skyworks is benefiting from strong demand of its wireless communications engines. Its expanding product portfolio, growing clout in the IoT solutions and 5G markets are key catalysts.

The company is striving to capitalize on the broad-based utilization of 5G infrastructure solutions across automotive, industrial IoT and advanced medical applications among others.

Further, Skyworks continues to win content at mobile and OEMs like Samsung, OPPO, VIVO and Xiaomi, which is a tailwind.

However, stiff competition from peers like Broadcom AVGO, which is also focusing on enhancing its Wi-Fi 6 connectivity portfolio, is likely to create pricing pressure and affect profitability.

Zacks Rank & Stocks to Consider

Skyworks currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Synopsys SNPS and Keysight Technologies KEYS, both flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Synopsys and Keysight is currently pegged at 12% and 10%, respectively.

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Skyworks Solutions, Inc. (SWKS) : Free Stock Analysis Report
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