Brean Capital: Broadcom 'All Grown Up Now'

Mike Burton of Brean Capital maintained a Buy rating on

on Wednesday with a price target raised to $53 from a $46 following the company's Analyst Day. Burton notes that Broadcom updated its guidance for the December quarter by raising its revenue expectations along with its operating expenditure spending. Broadcom guided its fourth quarter revenue down 8 percent quarter-over-quarter to $2.075 billion due to what the analyst describes as “normal seasonality.” Operating expenditure was guided to “down $40 million” from “down $50 million” due to mis-forecasting the timing of how quickly some of the baseband costs were coming out of the model. Burton favors owning shares of Broadcom as the company will continue to benefit from cost reductions from wind-down of its baseband business in the coming years. The analyst also adds that the company announced a “handful” of shareholder friendly initiatives (including a focus on decreasing share dilution and increasing cash flow via tax strategies) as the company transitions from a growth-oriented company to a mature and stable company.