Skyworks, Qorvo get rating upgrades at Citi after merger announcement

[Skyworks Solutions office nestled in the heart of Silicon Valley. Skyworks Solutions, Inc. is an American semiconductor company]
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Citi upgraded ratings of Skyworks Solutions (NASDAQ:SWKS [https://seekingalpha.com/symbol/SWKS]) and Qorvo (NASDAQ:QRVO [https://seekingalpha.com/symbol/QRVO]) to Neutral from Sell after Skyworks announced it was acquiring Qorvo in a cash and stock deal.

The firm set a new target price of $91 for Skyworks and $105 for Qorvo.

Under the agreement, Qorvo shareholders will receive $32.50 in cash and 0.960 of a Skyworks common share for each Qorvo share held at the close of the transaction. The deal [https://seekingalpha.com/news/4509194-skyworks-to-buy-qorvo-in-cash-and-stock] values the combined enterprise at about $22B.

Analysts led by Atif Malik said the deal is aimed at bringing both scale and diversification with expanded Serviceable Addressable Market, or SAM, and increasing customer stickiness in handset market and broader Total Addressable Market, or TAM, in other markets, and about $500M expected cost synergies.

"Regulatory approvals are a major concern, but we assume high probability of approval as China is self-sufficient in mobile, and RF [radio frequency] market is highly competitive with Broadcom (AVGO [https://seekingalpha.com/symbol/AVGO]) and Murata (OTCPK:MRAAY [https://seekingalpha.com/symbol/MRAAY]) (OTCPK:MRAAF [https://seekingalpha.com/symbol/MRAAF]) as main competitors. In addition, major customer Apple (AAPL [https://seekingalpha.com/symbol/AAPL]) supports the deal," the analysts added.

The analysts noted that they previously said that industry consolidation is needed to offset Apple's concentration risk and competitive forces in the RF industry. Thus, they have upgraded the ratings of Skyworks and Qorvo.

Separately, KeyBanc upgraded its rating on Skyworks to Overweight from Sector Weight with a price target of $105.

Analysts led by John Vinh said the upgrade was based on — view merger as highly complementary, combining a strong track record of execution at Skyworks with best-in-class RF technologies at Qorvo, which possesses superior bulk acoustic wave, or BAW, filter capabilities; consolidates a maturing subsector that should result in better pricing and margin expansion; and over $500M in cost synergies, which gets us to $7.46 in EPS in 2027.

"This deal is not without risk as the close is not expected for 18 months and requires China approval; however, we see favorable risk/reward with SWKS trading at 11x our '27 EPS," said Vinh and his team.

Meanwhile, Skyworks saw its rating raised at several other firms. The rating was upgraded to Equal-Weight at Barclays and to Overweight at Piper Sandler with a $140 price target.

_Update: The story was updated with information on rating changes at other firms._

MORE ON SKYWORKS AND QORVO

* Qorvo, Inc. (QRVO) M&A Call Transcript [https://seekingalpha.com/article/4834000-qorvo-inc-qrvo-m-and-a-call-transcript]
* Skyworks Solutions, Inc. (SWKS) Presents At Goldman Sachs Communacopia And Technology Conference (Transcript) [https://seekingalpha.com/article/4821080-skyworks-solutions-inc-swks-presents-at-goldman-sachs-communacopia-technology-conference-2025]
* Pinpointing Skyworks Loss At Apple And More [https://seekingalpha.com/article/4816191-pinpointing-skyworks-loss-at-apple-and-more]
* Skyworks Solutions, Qorvo issue preliminary results after deal news [https://seekingalpha.com/news/4509208-skyworks-solutions-qorvo-issue-preliminary-results-after-deal-news]
* Skyworks to buy Qorvo in cash-and-stock deal [https://seekingalpha.com/news/4509194-skyworks-to-buy-qorvo-in-cash-and-stock]