SWKS Plunges 23% YTD: How Should Investors Play the Stock?

Core Viewpoint - Skyworks Solutions (SWKS) has underperformed compared to the broader Computer & Technology sector and competitor Broadcom (AVGO) in the year-to-date period, with shares declining by 22.7% while Broadcom's shares increased by 43.1% [1][2] Group 1: Performance and Market Challenges - Skyworks' underperformance is attributed to challenges in broad markets and data centers, including high inventory levels and sluggishness in wireless infrastructure and traditional data center markets [2] - The company faces stiff competition from rivals like Qorvo (QRVO), which adds pressure to its market position [2][7] Group 2: Portfolio Strength and Opportunities - Despite challenges, Skyworks benefits from a diversified portfolio with design wins in infrastructure, automotive, and emerging IoT sectors [2][3] - The company has secured 5G content for premium Android smartphones and expanded its Wi-Fi 7 design win pipeline, indicating progress in key markets [4] - New AI features in smartphones are expected to drive a multiyear upgrade cycle, increasing Radio Frequency complexity and positioning Skyworks favorably in the market [5] Group 3: Financial Outlook - For Q1 fiscal 2025, Skyworks expects revenues between $1.05 billion and$1.08 billion, reflecting a 4% sequential increase at the mid-point, but an 11.34% year-over-year decline is anticipated [8] - The consensus estimate for earnings is $1.57 per share, indicating a 20.3% year-over-year decline [8] Group 4: Valuation and Investment Sentiment - Skyworks shares are considered cheap with a Value Score of B, but the sluggish outlook makes it a risky investment for growth-oriented investors, reflected in a Growth Score of D [10][11] - The forward 12-month Price/Sales ratio for SWKS is 3.68, lower than the sector's 6.12, suggesting potential undervaluation [11]