Oppenheimer Previews Broadcom, 'One Of The Best-Positioned Large-Cap Semiconductor Names'

Oppenheimer issued an earnings preview for

ahead of its earnings announcement after Tuesday's market close. Oppenheimer rates Broadcom as Outperform with a $52 price target. Analysts Rick Schafer and Shawn Simmons wrote, "We view Broadcom as a core holding and one of the best-positioned large-cap semi names to drive top-line growth and begin returning cash to shareholders. Broadcom's diversified business should benefit from any pickup in enterprise spending, and coupled with share gains, should outperform peers...We expect 1Q results in line with consensus $2.0B/$0.60 ests, with 2Q tracking just ahead of consensus $2.01B revenue estimate...We expect BRCM's GM, FCF and capital allocation/return profiles to steadily improve into 2015... With cash freed up post-baseband, we expect a renewed investment in BRCM's core businesses and, simultaneously, improved capital allocation/return." Oppenheimer believes that networking may be the key source of first quarter upside potential. This will be driven by solid data center demand. Broadcom's Broadband business may see above 5 percent growth as it benefits from investment across strategic growth areas. Oppenheimer expects free cash flow to reach $2 billion for 2015, while the dividend yield may stay around 1.3 percent. Finally, Oppenheimer believes that there could be upside in EPS as investors see the results in restructuring and reinvestment initiatives undertaken by company management.