Qorvo (QRVO) and Skyworks (SWKS) Downgraded on Slowing 5G Handset Growth

Wells Fargo downgraded Qorvo (NASDAQ: QRVO) and Skyworks Solutions (NASDAQ: SWKS) to Equal Weight from Overweight in a note to investors Tuesday, also cutting the price targets.

Analyst Gary Mobley cut the price target on Qorvo to $85 from $130 and Skyworks to $95 from $130.

Mobley stated they believe that given the slowing growth for 5G mobile handsets, they doubt investors will flock back to RFFE names such as Skyworks and Qorvo, "at least not to a level to allow these names to outperform the broader chip sector."

"RFFE players QRVO & SWKS cannot find love from investors, as reflected in the poor relative perf. TTM & as reflected in the significant re-rating (lower) of valuation multiples over the past year," wrote Mobley.

"Gartner is now (as of September) forecasting overall mobile phone unit sales in 2022 to decline 9.4%, to 1.42 billion units (5G handsets will account for 48.0% of units, or ~675M units. Others, like QRVO, believe 5G units will be less than 650MM in 2022. Gartner also forecasts 2023 mobile phone sales will decrease another 2.0%, to 1.397 billion units, with 5G handsets to account for 57% of units, or 801MM units. However, this to us seems aggressive. Based on Gartner's forecast, 5G unit sales may trend up >300MM units, <130MM units, and ~126MM units in 2021, 2022, and 2023, respectively," he added.

By Sam Boughedda

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