Two Chip Stocks: One Soared, One Tanked. Here’s Why.

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Shares of KLA and Skyworks Solutions went in different directions.


Dreamstime

A company that makes chips, and one that makes the machines that make the chips have fared very differently since they reported their earnings.

Shares of KLA (ticker: KLA) soared 9% after the semiconductor equipment maker reported it has sold out of its products—for the rest of the year—and issued a bullish forecast through December.

But shares of chip maker

Skyworks Solutions

(SWKS), an

Apple

supplier, plunging 6% after its earnings barely topped forecasts. And expectations are high because of the semiconductor shortage.

By comparison, the benchmark PHLX Semiconductor index, or Sox, was up 0.3% in afternoon trading Friday.

KLA reported a fiscal fourth-quarter profit of $684 million, or $4.43, on an adjusted basis, on revenue of $1.93 billion. Analysts had modeled adjusted profit of $3.99 a share on revenue of $1.87 billion.

But it was KLA’s forecast that propelled shares upward. The company projected that spending on silicon wafer equipment—some is used to find defects during the fabrication process—would rise to over $80 billion; its prior estimate was $75 billion. And executives said KLA it had sold out of its semiconductor tool for the year.

Credit Suisse analyst John Pitzer wrote that KLA’s backlog for this calendar year suggests the first half of 2022 is going to be just as strong—a positive sign for things to come. Pitzer also noted that the broad-based demand for memory-related products would benefit the company. Pitzer reiterated his Outperform rating and $380 target price.

Skyworks Solutions, on the other hand, reported a fiscal third-quarter profit of $358.6 million, or $2.15 a share on an adjusted basis, and revenue of $1.1 billion. The results just topped consensus estimates. The company’s guidance was also roughly in line with expectations.

Raymond James analyst Chris Caso wasn’t deterred, and reiterated his Outperform rating and $220 target price. Case called the results and guidance “solid” and wrote that the outlook for the rest of the fiscal year didn’t contain any surprises.

Baird analyst Tristan Gerra has an Outperform rating and a $220 target price as well. He pointed to the company’s acquisition of Silicon Labs, which closed Monday, as a way of boosting the company’s annual per-share earnings and revenue. Gerra estimated the deal would add 60 cents a share to profit and about $400 million in annual revenue run rate. He noted the cross-selling opportunities, should drive growth for Silicon Labs going forward.

Write to Max A. Cherney at max.cherney@barrons.com

Harry Byrne

Harry Byrne

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