Broadcom's Revenue Beat: What Wall Street's Saying

Broadcom analysts were mostly bullish on the company's solid fiscal second quarter results.
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Shares of Broadcom  (AVGO) - Get Report were rising Friday following its revenue beat on Thursday evening, and analysts on Wall Street wrote mostly bullish notes on the company's prospects. 

The chipmaker reported fiscal second-quarter revenue of $5.742 billion and non-GAAP diluted earnings per share of $5.14. The company had been expected to report sales of $5.7 billion and earnings of $5.14 a share, based on a FactSet survey of 27 analysts.

In the same period a year ago, the company posted earnings of $5.21 a share on sales of $5.5 billion. It reported net income of $481 million.

Broadcom shares rose 3.4% to $319.43 premarket Friday.

Here's what Wall Street is saying about the quarter:

Piper Sandler (Overweight, PT raised from $300 to $360)

We are making Broadcom our top large cap pick, as we feel the company is extremely well positioned over the next 12 to 24 months. First, the data center and storage markets will likely continue to see their current strength. Second, we see the handset business turning up nicely in the October quarter, as Broadcom’s largest customer launches its 5G phone. Third, outside of the strong business trends, Broadcom moves to our top large cap pick due to valuation dynamics, as it trades at 14x versus the SOX at 22x.

- Harsh Kumar

KeyBanc (Overweight, PT raised from $290 to $360)

We believe the Company is well positioned for above-industry growth as the wireless transition to LTE is increasing filter design complexity and driving rapid adoption of BAW filters. Additionally, we believe Broadcom's strong track record of successful acquisitions will provide a meaningful diversification opportunity and LT growth stability given that the smartphone market continues to saturate at the high end.

-John Vinh

Deutsche Bank (Buy, PT raised from $300 to $360)

AVGO delivered a solidly in-line report/guide despite sector-wide COVID-related headwinds. Digging deeper into the co’s guide left us even more impressed as it is in-line despite the co not benefitting from a seasonal Wireless ramp (pushed out to Oct qtr), significantly reducing channel inventory in Industrial/Brocade, and undershipping overall demand due to supply shortages (Malaysian SIP orders still rippling through F3Q). 

Overall, we believe these combine to yield a positive near-term set-up for the shares as F3Q guidance appears prudently conservative and F4Q should benefit from significant reversals in each of the F3Q headwinds.

-Ross Seymore

JPMorgan (Overweight, PT raised from $340 to $365)

We believe Broadcom is a leader in wireless, datacenter networking, AI/deep learning ASICs, storage, and now infrastructure silicon/hardware/software with broad-based exposure to positive trends in these end markets. Broadcom remains a semiconductor powerhouse with unmatched scale and technology capabilities in the industry, securing its leadership positions in a diverse set of end markets.

-Harlan Sur

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