How To Invest In The iPhone Without Investing In Apple

In a report published Wednesday, Oppenheimer analyst Rick Schafer commented on a recent meeting with Skyworks Solutions Inc (NASDAQ: SWKS)'s senior executives during the 18th Annual OPCO Technology, Internet & Communications Conference.

Shafer noted that the tone of the meeting was "decidedly upbeat" as the company's executives displayed a "confident tone" that mirrors its recent "bullish" earnings call.

The analyst continued that Skyworks is a "key beneficiary" of the rising RF content/complexity as mobile devices migrate from 3G to 4G As such, the company benefits from its "unique systems-level expertise" which is being increasingly leveraged by original equipment makers (OEM), leading the company to "sustained" share and content gains.

Related Link: iPhone Demand & China: Why Jefferies Cut Apple's Price Target

In fact, Schafer argued that Skyworks' visibility has "never been better" and the company is likely white-boarding work for smartphone designs for a tier-one and China white-box OEM.

Meanwhile, the company's largest customer, Apple Inc. (NASDAQ: AAPL), already accounts for 35 to 40 percent of sales and "continues to push greater performance," which will drive sustained RF content increases. The analyst estimated Skyworks' band counts will likely exceed 30 in the anticipated iPhone 7 versus approximately 20 in the iPhone 6. With approximately $5 of content in the iPhone 6, the analyst estimated another 15 percent-plus content increase is likely as soon as this year in the iPhone 6s launch.

Outside of Apple, Skyworks' remains "strategically important" in the Broad Market (approximately 26 percent of total sales) which represents an "attractive growth driver." The analyst is expecting the Broad Market to grow at a mid-teens compounded annual growth rate over the mid- to long-term and generate above corporate average gross margins.

Bottom line, the stock has dropped 13 percent since its quarterly print in late July, but is still up 24 percent year-to-date. The analyst stated that he remains a buyer and would use recent weakness as an opportunity to build or "bolster" long-term positions.

Shares remain Outperform rated with an unchanged $120 price target.