Goldman Sachs Raises Target On Broadcom From $171 To $185

Goldman Sachs’ Toshiya Hari mentioned that during a quarter when Broadcom Ltd AVGO faced headwinds in its enterprise and wireless segments, the company “posted solid results as weakness was offset by strength in wired and strong execution on the company’s integration.”

Hari reiterated a Buy rating on the company, while raising the price target from $171 to $185.

Executing Well

The analyst continues to be bullish on Broadcom, given expectations that estimates would move up, driven by continued execution on the integration, as well as confidence in the company’s wired and wireless roadmaps.

Broadcom reported its 2QFY revenue in line with the consensus but marginally below the estimates, while the EPS came in above the estimate and consensus.

For 3QFY, the company’s revenue guidance is in line with the estimate and the consensus at its midpoint. Management expects opex to be flat, quarter on quarter.

Bullish Stance

“We are bullish on AVGO given its strong position in RF, wired infrastructure, and ability to drive leverage in the model. We expect strong growth in the wireless business in 3QFY,” Hari stated.

Broadcom expects to sustain the strong performance in its wired business, with the new Jericho and Tomahawk products driving a refresh cycle.

The EPS estimates for CY16 and CY17 have been raised from $9.59 to $10.62 and from $12.18 to $13.19.