Pacific Crest analysts remain buyers of Broadcom Ltd (NASDAQ: AVGO), Cirrus Logic, Inc. (NASDAQ: CRUS) and Skyworks Solutions Inc (NASDAQ: SWKS) amid meaningful improvement in iPhone inventories due to aggressive promotion
by Apple Inc. (NASDAQ: AAPL).
The brokerage's "carrier surveys in North America and Western Europe indicate improvement in both sell-through and inventory
management."
"With iPhone 6s inventories trending to the lower end of the targeted range, we see significantly less risk of an inventory
correction ahead of the iPhone 7 ramp," analyst John Vinh wrote in a note.
BOGO Deals Deliver
The reduction in inventories was attributed to the return of BOGO (buy-one-get-one) promotions in May, resulting in substantial
improvement in iPhone 6s sell-through and inventories. The promotions brought down store inventories to the lower end of the
targeted range of 6–10 days.
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In addition, Vinh sees risk of a SAMSUNG ELECTRONIC KRW5000 (OTC: SSNLF) GS7 inventory correction, albeit more moderate, given unprecedented
promotions.
The analyst said, "In May, T-Mobile US Inc (NASDAQ: TMUS) resumed its BOGO promotions with the rest of the carriers, which kept
inventories largely stable on a m/m basis. Additionally, Samsung has resumed its free VR headset promotion in conjunction with
carriers running BOGO."
"With GS7 inventories increasingly modestly, despite unprecedented promotional activity, we still see increased risk of an
inventory correction," Vinh noted.
Vinh has an Overweight rating on Broadcom, Cirrus Logic and Skyworks, with price targets of $185, $40 and $90, respectively.
At the time of writing, shares of Broadcom were down 0.09 percent at $162.43, Skyworks were down 0.62 percent at $66.52 and
Cirrus shares were up 1.97 percent at $36.72.
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