Broadcom Ltd AVGO reported its FQ3 results ahead of expectations and raised its guidance for FQ4. The EPS upside could be even higher, Credit Suisse’s John W. Pitzer said in a report. He reiterated an Outperform rating on the company, with a price target of $200.
Following Broadcom’s beat and raise, analyst Pitzer revised the EPS estimates higher for 2016 and 2017 from $11.67 to $12.08 and from $13.34 to $14.13, respectively.
Leverage Situation
Pitzer mentioned that although the 2017 EPS estimate had been raised by ~6 percent, there could be more upside in Broadcom “than any other name in our coverage universe.” He added that the upside is on account of:
- GM leverage, as the company optimizes its product portfolio
- OpM leverage, as Broadcom executes on continued M&A synergies
- Lower interest expense, as the Company de-leverages
Wireless Versus Wireline
The only concern area in the quarter was Wired, which accounts for 54.3 percent of revenues, and was sequentially flat and below the guidance of ~2 percent growth. The analyst noted that this was due to supply constraints in STB, which prevented Broadcom from shipping to demand, which is “a high class problem.”
“Wireless (26.5% of Rev) content story at AAPL still on track with Wireless up 27.3% q/q in F3Q and guided up >30% q/q,” the Credit Suisse report stated.
Guidance for both Enterprise Storage and Industrial seem “exceedingly conservative,” and provide “more cushion,” Pitzer commented.
Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.