What to Expect When Avago Technologies (AVGO) Reports Fourth Quarter Earnings Today

NEW YORK (TheStreet) -- Shares of Avago Technologies  (AVGO)  are up 1.64% to $93.71 in early market trading Wednesday, ahead of its scheduled fourth quarter earnings results after the closing bell.

Analysts' estimates call for fourth quarter earnings of $1.68 per share, higher than the 89 cents per share Avago Technologies reported in the same quarter of 2013.

Analysts are expecting $1.55 billion in revenue for the period, also higher than the $738 million in sales it posed a year ago.

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Yesterday, Avago Technologies had its price target raised to $105 from $87 with a "buy" rating by analysts at Brean Capital, based on expectations of a solid fourth quarter earnings report.

Separately, TheStreet Ratings team rates AVAGO TECHNOLOGIES LTD as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate AVAGO TECHNOLOGIES LTD (AVGO) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and premium valuation."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • AVGO's very impressive revenue growth greatly exceeded the industry average of 18.6%. Since the same quarter one year prior, revenues leaped by 99.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 129.19% to $314.00 million when compared to the same quarter last year. In addition, AVAGO TECHNOLOGIES LTD has also vastly surpassed the industry average cash flow growth rate of 11.46%.
  • The gross profit margin for AVAGO TECHNOLOGIES LTD is rather high; currently it is at 61.38%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -12.74% is in-line with the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 215.5% when compared to the same quarter one year ago, falling from $142.00 million to -$164.00 million.
  • You can view the full analysis from the report here: AVGO Ratings Report

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