It’s not even July, and already there is the whiff of a fall Apple product launch in the air. The next round of iPhones is due to arrive in September, and the Street sees opportunity—and not just for Apple stock.
Barclays chip analyst Blayne Curtis on Tuesday made the case to buy mobile phone-related chip stocks heading into the coming Apple (ticker: AAPL) iPhone 13 launch. “For Apple, this is the time the supply-chain chatter picks up, and we expect builds to be up year-over-year as Apple positions around the continued supply tightness,” Curtis writes in a research note.
For the long run, his favorite name in the group is mobile-phone radio-chip company Qorvo(QRVO). He has an Overweight rating on the stock, and lifts his price target to $220 from $210. He says estimates can move higher over time, but adds that companies with more exposure to Apple are likely to outperform, and notes that Qorvo is less so positioned than some other plays. Curtis likes that Qorvo’s business is more balanced than those of peers.
He writes that “Apple-levered” Cirrus Logic(CRUS) and Skyworks Solutions(SWKS), both of which rely on Apple for a majority of their revenue, “are positioned for beat/raises into earnings” and likely to outperform into the fall. He has Equal Weight ratings on both Cirrus and Skyworks, but raises his target to $90 from $85 on Cirrus, and for Skyworks, to $200 from $185.
Curtis also sees Broadcom(AVGO) gaining slots in the next iPhone, while keeping his Overweight rating and $525 target price.
In their latest fiscal years, Apple accounted for 83% of revenue at Cirrus, 56% at Skyworks, 30% at Qorvo, and 15% at Broadcom, according to the latest 10-K regulatory filings of each company.
On Tuesday, Cirrus stock is up 4.5%, while Skyworks and Qorvo shares have gained more than 4%, and Broadcom stock is up 0.9%.