Apple (AAPL) Suppliers Finish Year Strong, Sees Weak China Trends Lingering Through Q1 - Longbow

January 10, 2018 9:42 AM EST
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Apple (NASDAQ: AAPL) suppliers Broadcom (NASDAQ: AVGO), Qorvo (NASDAQ: QRVO), and Skyworks Solutions (NASDAQ: SWKS) finished the year strong according to Longbow analyst Mike Burton who believes Q4 reports were in line with guidance and expectations for the mobile semiconductor names as Apple suppliers report above seasonal and consensus expectations while some of the misses are blamed on slower sales of Chinese Handsets. The analyst comments "We believe the weaker trends in the China region will persist in Q1 and will result in a “lack of upside” to guidance for mobile semiconductor suppliers in general, with Apple suppliers seeing better trends than the overall market."

Burton believes Q4 end market supply chain trends support a mid-single digit QoQ revenue growth rate for mobile semiconductor suppliers. The analyst further comments "We like Content Gainers and think the RF names should be bought as most of the names declined 7-10% in December around weak November sales reports. While the near term may be choppy, we like the opportunity in mobile semiconductors (AVGO, QRVO, SWKS) for unit volume increases in 2018 driven by the increased RF content in Apple phones along with newer Chinese OEMs who are aggressively launching new phones. We believe this will result in the RF TAM being further expanded by the move towards MIMO and 5G (2019/2020)."




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