NEW YORK (TheStreet) -- Shares of Broadcom Corp. (BRCM) are down 0.77% to $43.56 one day before its Analyst Day. Here's what Pacific Crest analysts are expecting from the global semiconductor solution provider's analyst event tomorrow:
"We believe Broadcom is likely to increase cash returns for the following reasons: estimated incremental free cash flow of $300 million-plus in 2015 versus 2014, more stable cash flow after the baseband exit, and estimated $2.5 billion to $3 billion of cash capability for returns versus current commitment of $850 million for 2015," analysts said.
"Every incremental $500 million of buyback could add five cents of EPS to our model," they noted.
"Given strong iPhone demand, which led to Avago Technologies' (AVGO) strong results and Synaptics' (SYNA) positive preannouncement, we expect Broadcom to raise Q4 revenue guidance to the high end of its prior range of $2 billion to $2.15 billion, which could lead to 7 cents of EPS upside with unchanged gross margin," analysts added.
Apple has traditionally used Broadcom chips in its entire range of Wi-Fi-capable devices, including the iPhone, iPad and Mac lines, according to Business Insider.
Separately, TheStreet Ratings team rates BROADCOM CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate BROADCOM CORP (BRCM) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- BRCM's revenue growth trails the industry average of 18.7%. Since the same quarter one year prior, revenues slightly increased by 5.3%. 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.
- BRCM's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, BRCM has a quick ratio of 2.49, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for BROADCOM CORP is rather high; currently it is at 56.24%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, BRCM's net profit margin of 4.33% significantly trails the industry average.
- Compared to its closing price of one year ago, BRCM's share price has jumped by 61.81%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- BROADCOM CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, BROADCOM CORP reported lower earnings of $0.74 versus $1.24 in the prior year. This year, the market expects an improvement in earnings ($2.92 versus $0.74).
- You can view the full analysis from the report here: BRCM Ratings Report