Analysts React to Updated Skyworks Forecast

Call buying has actually been extremely popular on SWKS

Jun 5, 2019 at 10:29 AM
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It was no secret that the Trump administration's crackdown on China's Huawei would be bad news for Skyworks Solutions Inc (NASDAQ:SWKS), and the company confirmed those fears last night by lowering its third-quarter outlook. The Massachusetts-based semiconductor manufacturer now expects sales between $755 million and $775 million for the period, compared to the previous expected range of $815 million to $835 million.

In response, SWKS shares are trading 2.6% lower at $67.59, though this keeps them in the middle of their recent consolidation pattern after a 24.4% slide in May. While many on the Street were obviously already expecting some type of weakness from Huawei drama, a number of bear notes are likely providing fresh pressure.

Specifically, at least nine price-target cuts have come through since yesterday's close, but even the lowest of these -- $75 at Mizuho and Barclays -- represent a premium to today's price. Most analysts in coverage have "hold" ratings on the equity, but nine others recommend buying the shares.

Interestingly, call buying has been very popular in recent weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). In fact, the 10-day call/put volume ratio at these exchanges stands at 4.89 -- ranking in the 99th annual percentile. This seems to have been driven by heavy trading at the July 70 call.

Plenty of traders were moving in on the bearish side, as well. That is, short interest popped 21.8% in the last two reporting periods.


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