Apple (AAPL) - Get Report may have sold 48 million iPhones last quarter, but the recent data from the tech giant's supply chain suggests that the demand for the popular gadget may be slowing.

"Our latest monthly carrier surveys, in conjunction with supply-chain feedback, indicate disappointing iPhone (6s) sell-through," according to a research note by Pacific Crest Securities analyst John Vinh, highlighting feedback from a recent survey. "This is resulting in rising inventories and increased risk to component supplier outlooks for Q4/Q1. In particular, we see risk to forward estimates for ARMH, AVGO, QRVO and SWKS. Until we get a reset in expectations, we expect Apple supply-chain names to remain range-bound."

Apple launched the iPhone 6s and 6s Plus models in late September, with sales exceeding records in its first weekend, as more than 13 million 6s and 6s Plus smartphones were sold in the first three days after launch.

For the upcoming fiscal first quarter, Apple forecast revenue to be between $75.5 billion and $77.5 billion, compared to revenue of $74.6 billion in the prior year's quarter.

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Even though the iPhone is Apple's greatest revenue driver, accounting for more than 60% of its revenue, data from the companies who make chips for iPhones is perhaps not as rosy.

Inventory levels have "increased sharply since the launch on Sept. 25," Vinh wrote in the note. "Despite being only one month into the launch of the iPhone 6s, inventory levels on a days-of-inventory (DOI) basis have already exceeded levels that were not reached until three months after the launch of the iPhone 6. While we previously encountered tight supply of the 'rose gold' iPhone 6s and of the larger iPhone 6s Plus, our latest monthly surveys indicated ample supply of both."

Pacific Crest says there is now "increased risk" to earnings estimates over the next two quarter.

"Conversations with supply-chain partners indicate a reduction to Q4 component orders for some suppliers, while component suppliers with longer lead times have seen a reduction in 1Q16 expectations and some expect a below-seasonal Q1, which is normally down 30% sequentially," the note said. "Thus far, four out of six key Apple suppliers ... have either missed Q3 estimates, guided Q4 lower or both."

See which three semiconductor stocks Pacific Crest analysts' still favor, despite Apple's potential iPhone problems. Included are ratings from TheStreet Ratings for another perspective.

TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

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ARMH

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1. ARM Holdings (ARMH)
Year-to-date return: 3.5%

Pacific Crest Rating/Target Price: Overweight/$63
Pacific Crest Said: Our $63 price target is based on a 2019 DCF analysis with a 9.53% WACC. Market and macroeconomic conditions could interfere with the realization of this price target, as could risks such as a slower ARM adoption rate into key markets, market-share loss to competitors, delayed product introductions and manufacturing difficulties.

TheStreet Said: no rating available

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AVGO

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2. Avago Technologies (AVGO) - Get Report
Year-to-date return: 23.1%

Pacific Crest Rating/Target Price: Overweight/$170
Pacific Crest Said: Our 12-month price target of $170 is based on 14x our C2016 consolidated EPS (with BRCM) estimate of $12. We view our target valuation as conservative and feasible, as a P/E of 15x reflects a slight premium to its historical median, but is still a discount to its peer-group industry average of 17x. We view this valuation as conservative because we believe Avago remains positioned to outperform its peers on both revenue and earnings growth given continued BAW filter adoption in smartphones and accretion benefits from the acquisitions of Broadcom, LSI and Emulex.

Market and macroeconomic conditions could interfere with the realization of this price target, as could company-specific risks such as weaker-than-expected demand for FBAR filters due to slowing high-end smartphone growth, potential competitive pressure from integrated RF solutions and customer concentration at Apple and Cisco.

TheStreet Said: TheStreet Ratings team rates AVAGO TECHNOLOGIES LTD as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

We rate AVAGO TECHNOLOGIES LTD (AVGO) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, compelling growth in net income, good cash flow from operations and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 12.9%. Since the same quarter one year prior, revenues rose by 36.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, AVAGO TECHNOLOGIES LTD's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 246.3% when compared to the same quarter one year prior, rising from -$164.00 million to $240.00 million.
  • Net operating cash flow has significantly increased by 88.53% to $592.00 million when compared to the same quarter last year. In addition, AVAGO TECHNOLOGIES LTD has also vastly surpassed the industry average cash flow growth rate of -30.92%.
  • The gross profit margin for AVAGO TECHNOLOGIES LTD is rather high; currently it is at 63.40%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 13.83% trails the industry average.
  • You can view the full analysis from the report here: AVGO
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SWKS

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3. Skyworks Solutions (SWKS) - Get Report
Year-to-date return: 9.1%

Pacific Crest Rating/Target Price: Overweight/$100
Pacific Crest Said: Our $100 price target is based on 12x our consolidated (with PMCS) EPS estimate of $8.17. Risks to our price target include, but are not limited to, an inventory correction associated with an overbuild of Chinese LTE handsets, faster-than-expected maturation of high-end smartphone growth, price pressures and market-share loss.

TheStreet Said: TheStreet Ratings team rates SKYWORKS SOLUTIONS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

We rate SKYWORKS SOLUTIONS INC (SWKS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 12.9%. Since the same quarter one year prior, revenues rose by 38.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SWKS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.66, which clearly demonstrates the ability to cover short-term cash needs.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, SKYWORKS SOLUTIONS INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • The gross profit margin for SKYWORKS SOLUTIONS INC is rather high; currently it is at 53.70%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 25.60% is above that of the industry average.
  • Net operating cash flow has increased to $221.90 million or 11.50% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -30.92%.
  • You can view the full analysis from the report here: SWKS