Another Strong Quarter From Broadcom

Following another strong quarter from Broadcom Ltd AVGO, Brean Capital’s Mike Burton stated that the company was “poised for above-average growth with industry leading profitability.”

Burton maintains a Buy rating on the company, while raising the price target from $205 to $210.

Poised For Growth

Consistent with the results reported for recent quarters, Broadcom reported another beat and raise for FQ4, driven by the product cycles in its wired and wireless segments, while also benefiting from a recovery in its key end markets, including enterprise storage.

“Longer term and more importantly, AVGO demonstrated how its strategy is paying off in leverage in the financial model,” the analyst mentioned, while pointing to the increase in the long-term operating margin guidance from 40 percent to 43 percent, with a payout target of 50 percent of the company’s free cash flow in terms of dividends, going forward.

“AVGO should be able to realize material cost synergies and general operating leverage based on the company’s expected scale as it further grows rapidly via acquisitions,” Burton went on to say.

FQ4 Beat

The company reported its non-GAAP revenue for FQ4 at $4.14 billion, in line with Broadcom’s November pre-announcement, when the company raised its revenue guidance range.

The non-GAAP revenue representing robust growth of 9 percent quarter on quarter, driven by the Wireless Communications business, which posted growth of 34 percent quarter on quarter.

The non-GAAP EPS beat the consensus expectations at $3.47.

The non-GAAP gross margin came in at 60.8 percent, a marginal improvement over the previous quarter, while the total non-GAAP opex stood at $803 million, representing a $3 million quarter on quarter decline.

FQ1:17 Guidance

Broadcom guided to non-GAAP revenue of $4.07 billion, ahead of the consensus forecast and better than the normal seasonal pattern,

The company is also expected a further decline in opex, which the analyst believes would drive another beat EPS.