Two analyst firms just released glowing notes on wireless chip designer Skyworks Solutions (NASDAQ:SWKS), sending the stock more than 5% higher overnight. Investors are reading between the lines, because Skyworks rival RF Micro Devices (UNKNOWN:RFMD.DL) also jumped more than 5% without any major news of its own.
Analyst house B. Riley bumped its target price on Skyworks from $28 to $35. The firm cited Skyworks' cheap valuation compared to other wireless chip designers and noted that the company is a strong play on the booming smartphone market in China.
BMO Capital dove even deeper, pinning its $40 price target on high prices and rich margins for Skyworks' 802.11ac Wi-Fi chips. In particular, new competition from Qualcomm (NASDAQ:QCOM) in the 802.11ac space seems to be a dud since Qualcomm's next-generation Wi-Fi products aren't gaining traction with device builders.
The BMO Capital note explains why RF Micro Devices shares also jumped sky-high. If mighty Qualcomm can't compete in the red-hot 802.11ac market, you have to assume that the gadget makers are pretty happy with the early leaders in that sub-market. Skyworks and RF Micro Devices march side by side under that banner.
Broadcom (UNKNOWN:BRCM.DL) is another big name in 802.11ac chips, and arguably set the standard for this new category last year. However, Broadcom is also a sprawling giant with its fingers in every imaginable wireless pie, unlike the smaller-scale and more specialized business models of RF Micro and Skyworks. So Broadcom gained less than 2% on these market notes, because the specific market under discussion simply matters more to the smaller players.
Qualcomm investors confirmed the analyst-driven thesis of today's wireless stock action by falling as much as 1%, a bit worse than the S&P 500. Like Broadcom, Qualcomm dampens the impact of any particular product line's success (or lack thereof) by being huge and diversified.
Skyworks reports holiday-quarter earnings on Thursday. RF Micro follows suit next week, and January closes out with reports from Qualcomm and Broadcom. Add these tickers to your Foolish watchlist to keep up with the upcoming avalanche of wireless chip news.