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Technology Stocks : Semi Equipment Analysis
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To: Sam who wrote (81741)11/20/2018 3:30:49 PM
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Apple iPhone Suppliers Tumble as BofA Chops Target Prices -- Barrons.com
DOW JONES & COMPANY, INC. 3:27 PM ET 11/20/2018

Symbol Last Price Change
AAPL 176.701 -9.159 (-4.93%)
SWKS 69.61 -1.15 (-1.63%)
QRVO 62.19 -0.96 (-1.52%)
CRUS 37.42 -0.6 (-1.58%)
QUOTES AS OF 03:28:15 PM ET 11/20/2018


Bank of America Merrill Lynch believes deteriorating iPhone sales will be problematic for several Apple(AAPL) suppliers.

The firm's analyst Vivek Arya lowered his price targets for the shares of Skyworks Solutions(SWKS) , Qorvo(QRVO) , and Cirrus Logic(CRUS) , citing Monday's Wall Street Journal article that reported Apple(AAPL) cut orders for all three newly released iPhone models.

We "highlight media reports from yesterday morning which suggest that the nature of Apple's(AAPL) production cuts are much broader," he wrote on Tuesday. "It's increasingly apparent that peaking/declining iPhone units are becoming much more of a headwind for mobile-chip suppliers than was anticipated at the start of this year."

Apple (AAPL) stock has fallen more than 18% this month as investors grow increasingly worried about iPhone sales given warnings from suppliers and negative commentary by analysts.

The analyst said the wireless-chip content in iPhones will not grow significantly until fifth-generation wireless technology becomes prevalent in 2020.

"The elimination of carrier subsidies for premium smartphones has reduced the incentive for end-users to upgrade as frequently," Arya wrote. "We think these structural changes to the smartphone market could keep a lid on mobile chip suppliers growth near-term."

Arya lowered his rating for Skyworks stock to Underperform from Neutral. He cut his price target for the company to $75 from $92.

He reiterated his Underperform ratings for Qorvo(QRVO) and Cirrus Logic(CRUS). For Qorvo(QRVO) he reduced his price forecast to $70 from $80. And for Cirrus Logic(CRUS) he lowered it to $31 from $33.

All three supplier stocks are lower in late afternoon trading Tuesday. Skyworks touched an intraday low of $68.65, a level the stock last traded at more than two years ago.

Write to Tae Kim at tae.kim@barrons.com
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