Broadcom Analyst Upgrade Sees Chip Upside
IRVINE, Calif. (
) --
Broadcom
(BRCM)
was adorned with a buy rating at Barclays on Tuesday as product cycles start to swing in the chipmaker's favor.
Citing strength in three areas -- business hardware like PCs and servers, an upswing in set-top boxes at DirecTV and the booming smartphone industry -- Barclays' analyst Tim Luke upgraded Broadcom to buy Tuesday.
Luke expects solid third-quarter numbers and a sunny outlook from Broadcom when the company reports earnings Oct. 20.
"We believe that Broadcom should see solid upside to its revenues, gross margins and potentially its operating expense guidance for the third quarter," writes Luke in his research note. "We believe that Broadcom's solid bookings in the third quarter may enable the company to provide guidance that is considered constructive by investors," Luke added.
Among a field of communications chip suppliers including
Marvel
(MRVL) - Get Report
,
Altera
(ALTR) - Get Report
,
PMC Sierra
(PMCS)
and
Xilinx
(XLNX) - Get Report
, Broadcom has a valuation that appears "somewhat attractive," according to Luke.
Luke raised his stock price target for Broadcom to $35 and now calls for the company to post an adjusted profit of 35 cents a share on $1.2 billion in revenue. The current Wall Street consensus estimate for the third quarter is a 32-cent profit on sales of $1.15, according to Yahoo! Finance.
Broadcom shares, which are up 75% this year, rose 3.4% to $30.87 in early trading Tuesday.
-- Written by Scott Moritz in New York
.
