Benchmark Company Comments on Key Takeaways from Broadcom Corporation Analyst Day

In a report published Tuesday, Benchmark Company analyst Gary Mobley reiterated a Buy rating and $35.00 price target on Broadcom Corporation (NASDAQ: BRCM).In the report, Benchmark Company noted, “What is [it] going to take for the company to shake the perception current management continues to throw away money (~$3.0 billion to date) by investing in a cellular baseband business that has yet to generate justifiable returns? Also, what is it going to take for Broadcom to shed the perception that the company stands to lose market share in combo connectivity silicon? We believe these are the key topics to emphasize following the company's recent analyst event. When and if these two risks are overcome through management's efforts and execution, we believe shares could experience astonishing earnings leverage and at least a 25% increase in valuation multiples (P/E from 12.0x to 15.0x). We are maintaining our Buy rating based on the likelihood shares will perform well under the two most likely scenarios. Under the first scenario, and the most ideal situation for management, the investments made into basebands will pay dividends in the form of LTE development success and design wins. This would lead to EPS accretion in the range of $0.00-$0.70 and the valuation multiple for the share would undoubtedly expand. In the second scenario, some management members may lose their jobs, and investments in baseband development will cease. Under this last scenario, it is possible for the company's EPS power could improve by $0.70; however, the P/E multiple may remain stuck at ~12.0x.”Broadcom Corporation closed on Monday at $27.88.