Is This Apple Supplier About to Pop?

Three months ago, when chipmaker TriQuint Semiconductor (NASDAQ: TQNT  ) posted its third-quarter results, it plunged more than 15% in one day. At that time, Fool analyst Steve Symington remarked:

While I certainly wouldn't be surprised if TriQuint stock languished from here until the company proves its earnings can resume sequential growth, it's worth noting the company has no shortage of growth opportunities with its other mobile customers. 

Three months later, TriQuint is up close to 20% and is set to release its fourth-quarter report on Feb. 5. It looks like investors recognized the opportunities at TriQuint's disposal and lapped up shares of the company when it was having a bad time. But, will TriQuint be able to sustain the momentum post-earnings? The answer looks like a "yes." A strong earnings report and outlook from peer Skyworks Solutions (NASDAQ: SWKS  ) , and growth in Apple's (NASDAQ: AAPL  ) addressable market, are endorsements of this possibility.

Some long-term pointers from Skyworks
When Skyworks reported its own set of results earlier in January, it beat expectations and issued a robust outlook. Skyworks sees huge opportunity for connectivity chips going forward, as the number of connected devices around the world is expected to exceed 75 billion by 2020, according to Morgan Stanley

Also, Skyworks expects to grow faster than the analog chip industry in the ongoing quarter, according to Fool analyst Anders Bylund. In addition, Skyworks expects its 802.11ac Wi-Fi chip to benefit from growth in the number of connected devices such as set-top boxes, Blu-ray players, 4K televisions, and 4G LTE services. Considering that even TriQuint is a part of this industry, investors can expect the company to enjoy the tailwinds that the connectivity boom will bring along.

The targets for TriQuint
Analysts expect TriQuint to earn $0.13 per share, compared to $0.04 per share last year, on revenue of $266 million, up 14% from the prior-year period.  The company shouldn't have much difficulty meeting these targets, as they are the mid-points of its own guidance. TriQuint had slipped when it last reported earnings because the company was seeing fewer orders from BlackBerry.

However, with business from BlackBerry dropping to mid single-digits in the third quarter, TriQuint should not see a big impact on its top line going forward as a result of this loss. As such, expect the company to offer a relatively bright outlook when it reports results next week.

Is a strong guidance in the cards?
There are very strong indications that TriQuint will put up a good show this year. First, since Apple contractor Foxconn accounts for 35% of TriQuint's revenue, the company stands to enjoy a boost from the China Mobile deal and Apple's next batch of iDevices this year. 

According to Cantor Fitzgerald analyst Brian White, Apple could sell 24 million more units this year due to its collaboration with China Mobile. A boost in iPhone sales should lead Apple to increase demand for iPhone parts, boosting results of suppliers such as TriQuint. Also, according to CNET, Apple might be on course to release devices with bigger screens this year, such as an iPad Pro with a 12-inch screen and a bigger iPhone. 

Such moves might boost Apple's sales, and TriQuint, being a key Apple supplier, should effectively ride its coattails. Additionally, TriQuint expects strong demand for its base station products due to the LTE build-out in China. According to management, the roll out of LTE across the globe by different operators should be a tailwind in the future. TriQuint believes that LTE accounts for just 20% of smartphones, and as the technology is rolled out across more markets it should create more opportunities for revenue growth. 

The bottom line
The year has started on a positive note for Skyworks, and TriQuint looks set to follow suit when it reports. There is no dearth of opportunity for TriQuint in the long run, and the company has some good catalysts to keep momentum intact this year.

Stay tuned for the complete news and analysis about TriQuint's upcoming quarterly report, and you can do the same by adding the stock to your Watchlist by simply clicking here.

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