Skyworks Solutions' (SWKS) pending acquisition of Qorvo (QRVO) is viewed favorably given expected cost benefits, and the shares are likely to trade on core fundamentals until the deal closes, RBC Capital Markets said Wednesday in a report.

Skyworks on Tuesday reported "decent" fiscal Q3 results driven by healthy iPhone demand and stable trends in its broad-markets segment, while its new capital-return policy drops the dividend in favor of buybacks, debt reduction, and mergers and acquisitions, the report said.

Q3 revenue of $935 million topped RBC's $925 million estimate and the $926 million Wall Street consensus, and adjusted EPS of $1.08 exceeded RBC's $1.03 forecast.

In Q4, Skyworks expected revenue of $1.035 billion at the range midpoint, above consensus, and EPS of $1.27 at midpoint, slightly below estimates due to higher interest expenses tied to the planned $2 billion debt financing.

RBC cuts its price target on Skyworks stock to $70 from $80 and maintained its sector-perform rating.

Skyworks shares dropped 4.3% in Wednesday trading as the broader chip sector slumped, and Qorvo fell 1.8%.

Price: 61.88, Change: -2.80, Percent Change: -4.33