What happened

Shares of Skyworks Solutions (NASDAQ:SWKS) fell by as much as 5% today after the market opened broadly lower. A Wall Street firm boosted its price target on the stock last night, potentially helping it recover. As of 12:45 p.m. EST, shares were down less than 3%.

So what

Rosenblatt Securities reiterated a buy rating on Skyworks stock while increasing its price target from $160 to $190, representing 16% upside from yesterday's closing price. Analyst Kevin Cassidy believes that the wireless chip specialist, which is benefiting from 5G technology adoption, can expand gross margin to above 51% as costs related to the COVID-19 pandemic start to subside.

Illustration of a 5G phone hovering above a world map and surrounded by six small cell towers

Image source: Getty Images.

Skyworks is also set to enjoy strong growth from Apple's iPhone 12 shipments, and the analyst has increased his estimates for revenue and earnings for this fiscal year. The Mac maker is Skyworks' largest customer and reports earnings today after the close. Cassidy is also optimistic that Skyworks will see upside from upgrades to Wi-Fi 6, the next generation of that wireless connectivity technology.

Now what

Skyworks is positioned to outgrow the broader wireless connectivity market, in the analyst's view. The company is scheduled to report its fiscal first-quarter earnings results tomorrow after the close. Guidance calls for revenue of $1.04 billion to $1.07 billion, with adjusted earnings per share of $2.06 at the midpoint of that sales outlook.

Cassidy expects to hear bullish commentary from Skyworks management tomorrow on the conference call and is looking forward to the company's outlook for 2021.