Skyworks Delivers Again In Q1, Extends One Of The Best Track Records On The Street

Reviewing the quarterly results of Skyworks Solutions Inc (NASDAQ: SWKS), Brean Capital noted that the company reported better-than-expected first-quarter results, extending one of the best track records on the Street.

Revenue Outperformance Came From Apple Ramp, Content Gains In China

Analyst Mike Burton pointed to the company's fiscal first-quarter revenue outperformance relative to the consensus estimate and the company's guidance. The analyst attributed the outperformance to the company's ramp at Apple Inc. (NASDAQ: AAPL), which contributed to over 40 percent of Skyworks' revenues, and from strong demand in China. The analyst clarified that the company is seeing content gains in China on new platforms as Huawei, which was its second largest customer.

Leverage Helps Earnings Beat

Non-GAAP gross margins of 51.2 percent was up from 51 percent reported for the fourth quarter, the firm added. The firm also noted that earnings per share of $1.61 beat the $1.58 consensus estimate, due to the leverage, arising out of operating expenditure growth growing at a slower pace than revenues.

Samsung Gains, Low China Inventories To Help Q2

Turning toward the second-quarter guidance, Brean Capital said Samsung gains and low China inventories drove the company to guide revenues above the consensus estimate. The firm also noted that the company said it will continue to execute on margins, translating to earnings per share of $1.40, a penny ahead of the consensus estimate.

Brean Capital believes the net increase of $405 million to the company's stock buyback program following a fresh $500 million plan announced by the company on the earnings call is a testament to the management team's belief in the business model, as the company continues to deliver superior shareholder returns.

Adjusting Estimates

The firm raised its second-quarter revenue estimate to $840 million from $811 million and non-GAAP earnings per share estimate to $1.41 from $1.36. However, the firm lowered its 2017 revenues estimate to $3.60 billion from $3.642 billion and non-GAAP earnings per share estimate to $6.26 from $6.43.

Raising Price Target

Brean Capital maintains its Buy rating on the shares of Skyworks Solutions, while it raised its price target to $95 from $85.

At time of writing, Skyworks Solutions shares were up 11.78 percent to $87.70.