TriQuint (TQNT) Seen Benefiting from Strong iPhone 6 Upgrade Cycle

Canaccord Genuity maintains its Hold rating and $20 price target on TriQuint Semi (Nasdaq: TQNT) and sees the company benefiting from a robust Apple (Nasdaq: AAPL) iPhone 6 upgrade cycle.

Analyst T. Michael Walkley commented, Based on our analysis, industry conversations, and recent teardown reports, we believe TriQuint has basically maintained its dollar content share in the iPhone 6/6 Plus devices versus the iPhone 5s/5c models. In fact, consistent with our prior expectations, we estimate flat to slightly down Y/Y RF dollar content for TriQuint in the new iPhone devices and believe TriQuint should benefit from very strong unit sales of the iPhone 6 devices in Q4/14 and in 2015. We believe TriQuint’s improving product mix, leading RFIC LTE-focused portfolio, and improved operating efficiencies position the company for steadily improving Y/Y sales and earnings trends during 2014 and beyond. Further, we believe the merger with RFMD remains on track to close in H2/14, and we believe the combined company can leverage its broad RFIC portfolio and significant cost synergies to generate significant gross and operating margin leverage.

Key points:

* Our recent surveys and analysis indicate very strong iPhone 6 demand, and we anticipate a record iPhone 6 upgrade cycle. Please see our separate Apple note, published Sept. 22, titled ¡§Monthly surveys indicate record iPhone 6 upgrade cycle, strong market share gains,¡¨ for our updated iPhone estimates.

* We estimate the RF front-end content in the iPhone 6/6 Plus increased to roughly $15.25-15.50 per unit versus $11.25-11.50 in the iPhone 5s/5c models due to increased LTE band support, SKU consolidation and features such as envelope tracking and carrier aggregation. We believe TriQuint basically maintained its blended dollar content in the iPhone 6 devices retaining the GSM/WEDGE PADs in some of the iPhone 6/6 Plus SKUs and is a supplier for a high-band PAD in certain North American iPhones (possibly as a Band 7 satellite PAD). Therefore, we estimate TriQuint¡¦s average RF dollar content is ~$2.25/unit in the new iPhones versus ~$2.50 in the iPhone 5s/5c.

* With our increased iPhone 6 sales estimates and consistent TriQuint $-content, we raise our 2015 pro forma EPS estimate from $0.87 to $0.92.

For an analyst ratings summary and ratings history on TriQuint Semiconductor click here. For more ratings news on TriQuint Semiconductor click here.

TriQuint Semiconductor closed at $18.62 yesterday.

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