Shares of Skyworks Solutions (NASDAQ:SWKS) gained 14.9% in October, according to data from S&P Global Market Intelligence. The wireless technologies stock benefited from market momentum and news that the U.S. and China had reached preliminary terms on "phase one" of a trade deal.
Skyworks sells components used in 5G, Internet of Things, and other communications technologies, and tariffs and a Commerce Department ban on doing business with Huawei has put a significant dent in the supplier's business. An improved outlook on the trade front boosted the stock last month, and the company also revealed that it was ramping up the production of solutions for next-gen Wi-Fi technology.
Skyworks published a press release on Oct. 9 announcing that it was increasing the production of modules used for Wi-Fi 6 routers. As per the release, the company will have its solutions in all-new 802.11ax Wi-Fi 6 routers, and it expects to see dramatic long-term growth for the Wi-Fi 6 chip market. Combined with the favorable development on the trade front, news of a significant win in Wi-Fi 6 helped the company post double-digit gains in October -- and momentum has continued for the stock.
Skyworks has continued to climb in November, trading up roughly 9% in the month so far. Much of this month's gains have likely stemmed from expectations that a trade deal could be reached soon and news that the Trump administration expects to grant exceptions to the ban on dealing with Huawei in the near future.
Skyworks is set to publish fourth-quarter earnings after the market closes on Nov. 12. The company is guiding for fourth-quarter sales to come in between $815 million and $835 million, representing a 17.5% year-over-year decline at the midpoint and an 8% increase sequentially. The company attributes the decline to the loss of business from Huawei. Excluding sales to the Chinese hardware giant from its comparison, management expects sales to be up roughly 20% on a sequential basis. Earnings per diluted share for the fourth quarter are expected to come in at $1.50.
Skyworks shares trade at roughly 16 times this year's expected earnings.