UPDATE: Credit Suisse Reiterates Outperform Rating, Lowers PT on Broadcom Corporation
In a report published Wednesday, Credit Suisse reiterated its Outperform rating on Broadcom Corporation (NASDAQ: BRCM), but lowered its price target from $50.00 to $45.00.
Credit Suisse noted, “BRCM beat 3Q, but guided 4Q rev worse than expected, down 4.8% q/q albeit off a higher base, implying a 4.3% miss to absolute estimates. Guidance embeds normal seasonal for Broadband and Mobile / Wireless, and below seasonal for Infrastructure on broad Macro weakness. Flat/down q/q in Mobile/Wireless with strong AAPL leverage will raise some eyebrows. It shouldn't: (1) it's a timing thing: We have BRCM's AAPL rev up 25% H/H, versus our Hardware Team estimating 21% H/H rev growth for AAPL, (2) it's a conservative thing: the last two years BRCM has guided 4Q conservative to then raise at their annual analyst day in December. We have raised larger concerns on handsets in 2013 and with 50% of BRCM revenue from Mobile/Wireless, they are not immune. However, AAPL/Samsung leverage, better margins even with consumer mix growth, incremental product cycles including dual band 11n, 11ac, NFC, 10Gig, DOSCIS3.0, etc. support our thesis for now. BRCM has grown topline (ex-NETL) 13% despite the semi industry remaining essentially flat since 2010, and demonstrable outperformance along with a stock trading at 10.3 times ex cash with a FCF yield of 11.3% sufficiently supports our outperform rating.”
Broadcom Corporation closed on Tuesday at $33.36.
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Tags: Credit Suisse