Why People Should Be Buying This Top 5G Stock in May?

The novel coronavirus outbreak has been hurting businesses across the globe, as the steps are taken to contain the virus have brought economic activity to a near halt. So it wasn’t surprising to see Skyworks Solutions (NASDAQ: SWKS) succumb to the impact of COVID-19 when it released its fiscal second-quarter results. The chipmaker’s third-quarter outlook fell short of Wall Street’s expectations, as it had to shave $45 million from its guidance to account for the negative impact of COVID-19. Management cited limited visibility while offering revenue guidance of $670 million to $710 million, which missed consensus estimates of $720 million by quite some margin. The SWKS stock at https://www.webull.com/quote/nasdaq-swks company expects adjusted earnings of $1.13 per share this quarter, lower than analysts’ expectations of $1.24 per share.

Skyworks Solutions Shows Resilience

  • Skyworks’ second-quarter results weren’t too bad, despite the challenges posed by the coronavirus pandemic. The SWKS stock company’s earnings of $1.34 a share were in line with estimates, and revenue of $766 million was slightly better than what Wall Street was looking for.
  • Its revenue was down 5% annually, but it would have been 4% higher had revenue at Huawei not been affected by coronavirus-related disruptions. Skyworks’ business with Huawei has also been impacted in recent monthsby the U.S.-China trade war.
  • The chipmaker’s revenue from the Chinese telecom giant now sits at a much lower level than it was historically, which is why excluding it gives a good picture of where Skyworks currently is.
  • More importantly, Skyworks claims to have scored design wins at other smartphone OEMs (original equipment manufacturers) in China such as Oppo, Vivo, and Xiaomi.

5G Smartphones Will Be A Long-Term Catalyst

  • According to Strategy Analytics, 24.1 million 5G smartphones were shipped in the first quarter of 2020. That number easily exceeded the 18.7 million 5G smartphones that were shipped in all of 2019. Strong demand from China, the U.S., Europe, and South Korea drove shipments higher as OEMs launched new 5G-capable devices.
  • Strategy Analytics points out that Samsung, Huawei, Vivo, Xiaomi, and Oppo were the top five 5G smartphone vendors and together accounted for 95% of total shipments during the quarter.
  • Of course, demand for 5G smartphones may take a hit in the coming months thanks to supplying chain disruptions and the economic fallout of COVID-19, but investors should focus on the bigger picture.
  • Market research firm Canalys predicted last year that 5G smartphone shipments could hit 800 million units in 2023, indicating that the market has a bright future despite the near-term headwinds.

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