NEW YORK (AP) -- Shares of semiconductor maker Skyworks Solutions Inc. rose Monday as an analyst said the company is preparing to take a bite out of the growing market for tablet computers.
THE SPARK: Oppenheimer & Co.'s interviews with sources in the consumer electronics supply chain suggest that Skyworks' chips will be built into "several" tablet computers that will go on sale in the first half of the year.
THE BIG PICTURE: The apparent uptick in sales comes as manufacturers scramble to develop tablets that can compete with Apple Inc.'s iPad. Many of these tablets will run Google Inc.'s Android software, which can already be found on a legion of smartphones.
THE ANALYSIS: Oppenheimer analyst Ittai Kidron rates Skyworks as "Outperform" and set a price target of $34, which represents a 13 percent gain over the current trading price of $29.97.
Kidron said that tablets have higher retail prices than smartphones, which will translate to higher margins. However, he warned that sales for the March quarter are likely to be "muted," as the supply chain remains tight.
Kidron believes that for the March quarter Skyworks will earn 38 cents per share on $315.5 million in revenue. He expects the company to earn $1.72 per share for the calendar year, followed by $1.92 per share for 2012. That compares with previous estimates of $1.69 per share for 2011 and $1.83 per share for the following year.
SHARE ACTION: Up $1.34, or 4.7 percent, to $29.97 in morning trading.