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Apple Suppliers Qorvo, Skyworks Double Upgraded to Buy at B of A on 5G Outlook

The firm expects `exponential growth in components required to upgrade' the world's smartphones and connected devices.
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Shares of Qorvo  (QRVO) - Get Qorvo Inc. Report and Skyworks  (SWKS) - Get Skyworks Solutions Inc. Report are higher in the Monday premarket after both were double upgraded at Bank of America on optimism about the Apple  (AAPL) - Get Apple Inc. Report suppliers' 5G prospects.

Bank of America analyst Vivek Arya upgraded the stocks to buy from underperform. He raised his price targets on the stocks as well, Qorvo to a Wall Street high $130 a share from $80 and Skyworks to $122 from $92.

The firm expects “exponential growth in components required to upgrade” the globe’s 1.4 billion 5G-compatible smartphones as well as “several hundred million” internet-of-things devices. The 5G tech is “one of the more compelling and investable themes in semiconductors,” Arya wrote.

Of all the 5G chip companies, Bank of America singled out Qorvo and Skyworks because they are key Apple suppliers. Qorvo derives about 32% of its annual revenue and Skyworks about 51% from supplying Apple.

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While Qorvo and Skyworks will definitely be winners in the 5G revolution, they won’t be the only tech companies to benefit from the shift, Arya said.

Bank of America sees the first phase of 5G-related investments helping infrastructure-chip makers like Marvell  (MRVL) - Get Marvell Technology Inc. Report, Analog Devices  (ADI) - Get Analog Devices Inc. Report and Xilinx  (XLNX) - Get Xilinx Inc. Report, while the next phase of the 5G revolution “could also favor handset” companies with radio-frequency technologies.

Qorvo shares are rising 2.2% premarket Monday. Shares of the Greensboro, N.C., company are up more than 75% in 2019, closing at a record on Friday. 

Skyworks are rising 2% in the premarket. The stock of the Woburn, Mass., company is up more than 50% this year.