KeyBanc Downgrades Skyworks Solutions (SWKS) to Sector Weight

KeyBanc analyst John Vinh downgraded Skyworks Solutions (NASDAQ: SWKS) from Overweight to Sector Weight.

The analyst comments: “We are downgrading SWKS from Overweight to Sector Weight for the following reasons:

Original assumptions when we previously upgraded SWKS to Overweight are no longer valid. When we originally upgraded SWKS to OW in October 2025, it was based on its pending acquisition of QRVO, where we expected it to create significant cost and revenue synergies. The cost synergies are estimated to be over $500M. However, that was based on a stable smartphone market environment and assumed the combined company would be in a better position to compete for sockets at AAPL. While we still believe this to be true, new content gains are likely to be offset by a contracting TAM.

The smartphone market continues to worsen, with cuts across all segments of the market and across all OEMs, including Apple, Samsung, and China. The severe price increase in memory and shortages are significantly impacting the smartphone market, which accounts for over 60% of revenues for SWKS/QRVO. Both China smartphone makers as well as AAPL and Samsung have cut their forecasts significantly as a result. We expect the shortages in memory will persist through all of 2027 and potentially into 2028. We’re hearing memory makers are planning to cut their allocation to the smartphone market next year by 20% in order to better service demand in data center. As such, we anticipate the smartphone market is likely to contract again in 2027.

Despite potentially compelling risk/reward, we think it will be difficult for the stock to work in a contracting market as 60% of revs from the combined company is from smartphones. In a contracting market over the next few years, we think it will be difficult for the stock to work, even if it’s trading at 8x our consolidated EPS inclusive of the merger. While risk/reward appears fair to favorable and the stock is inexpensive, we see minimal catalysts over the next 12 months.”

For an analyst ratings summary and ratings history on Skyworks Solutions click here. For more ratings news on Skyworks Solutions click here.

Shares of Skyworks Solutions closed at $58.24 yesterday.

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