Broadcom: What the Analysts Are Saying After the Earnings Report

Broadcom's quarter was assessed on Friday by analysts at RBC, JPMorgan, Morgan Stanley, Jefferies and Barclays. The shares are wavering.
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Broadcom  (AVGO) - Get Report shares were wavering on Friday as analysts assessed the semiconductor company's first-quarter-earnings report from Thursday after the closing bell. 

RBC - Outperform (Price Target Lowered to $300 from $360)

"We see M&A integration, stock buybacks, and margin expansion driving earnings-per-share growth. We see the Symantec integration and margin expansion driving EPS upside in 2020/2021. On an annual basis, we see stable to slightly positive revenue trajectories for AVGO’s key businesses," RBC said. 

JPMorgan - Overweight (PT Lowered to $340 from $380)

"Despite near-term uncertainty and limited visibility stemming from Covid-19, the team continues to execute well and remains on track to transition to a company focused on cloud/hyperscale datacenter, service provider, and enterprise markets (sustainable growth trends, long product cycles, strong profitability profile, and synergies with silicon/software businesses)," analyst Harlan Sur wrote.

Morgan Stanley - Overweight (PT Lowered to $340 from $361)

"Given the uncertainty around Covid-19, we thought the company did a good job of framing potential outcomes. What is clearly being overlooked in the stock, however, is the 50%+ operating margins of this business and stability in software. We expect EPS to hold up much better than peers," analyst Craig Hettenbach said. 

Jefferies - Buy (PT Lowered to $300 from $380)

"By 2020, we expect AVGO's infrastructure software revenue to grow to 29% of total revenues. We view this as a major positive as 1) the business is highly predictable with 80-85% ratable revenue and 2) the shift makes the company less dependent on consumer product cycles," analyst Mark Lipacis wrote. 

Barclays - Overweight (PT Lowered to $320 from $360)

"AVGO indicated that booking trends were solid so far in the quarter, although visibility is limited and sized any potential impact to fiscal 2020 from Covid-19 as 5% to 10%. The stock has underperformed recently given higher debt load, but with a dividend yield now above 6% and a diversified business model, the name looks attractive to us," analyst Blayne Curtis wrote.

Broadcom at last check was off 5.4% at $206.89 a share.