Broadcom Reports Solid Results, Dividend As Analysts Boost PTs

Broadcom (AVGO) has reported an in-line April quarter, and guided to an in-line July quarter at $5.75B (consensus $5.8B). Shares in AVGO gained 1% in Thursday’s after-hours trading following the earnings release.Specifically, Q2 Non-GAAP EPS of $5.14 was in-line with consensus expectations, while GAAP EPS of $1.17 beat by $0.21. Revenue of $5.74B climbed 4% from the previous year, and topped Street estimates by $50M. Meanwhile Q2 adjusted EBITDA was $3.2B, again, coming in slightly higher than the $3.11B consensus.Semiconductor Solutions reported revenue of $4,027M (-1% y/y) but Infrastructure software revenue came in strong at $1,715M (+21% y/y).“Second quarter results were in-line with our expectations, and saw limited impact from the effects of COVID-19,” commented Hock Tan, CEO of Broadcom Inc. “Looking ahead, our third quarter guidance for semiconductors reflects a surge in demand from cloud, telecom and enterprise customers, offset by supply chain constraints and an expected substantial reset in wireless.”At the same time the company declared a $3.25/share quarterly dividend, in line with previous payouts, for a forward yield of 4.2%.“We generated record quarterly free cash flow of over $3 billion and reinforced our balance sheet, ending the quarter with over $9 billion of cash,” explained Tom Krause, CFO of Broadcom Inc. As a result, AVGO “remain[s] committed to maintaining our dividend while we navigate these unprecedented times.”Following the report Mizuho Securities analyst Vijay Rakesh reiterated his AVGO buy rating while ramping up his price target from $315 to $325 (5% upside potential).“We continue to see AVGO as well positioned, driven by 5G networking and wireless, software M&A, strong FCF, and dividends, with near-term COVID-19 headwinds subsiding” Rakesh told investors, adding that the company is currently trading at an attractive ~13.1x F21E (Oct) P/E.Likewise RBC Capital’s Mitch Steves boosted his price target from $300 to $340 noting that AVGO is seeing much more demand than it can currently supply for Q3. “AVGO is seeing strong uplift in demand from the ramp of next-generation deep learning inference chips” the analyst wrote, while demand from enterprise customers for data protection controllers has recovered and is showing strength.Overall, AVGO scores a bullish Strong Buy Street consensus, with 19 buy ratings offset by 2 hold ratings. However, the average analyst price target stands at $303, indicating downside potential of 2%. Shares in AVGO are trading down 2% year-to-date. (See AVGO stock analysis on TipRanks).Related News: Slack Plunges 15% Post-Print Despite Multi-Year Amazon Deal Ebay Lifts Quarterly Sales and Profit Forecast; Shares Jump To All-Time High Microsoft Buys Metaswitch For Cloud-Based Telecoms Move, 5G Expansion More recent articles from Smarter Analyst: * Slack Plunges 15% Post-Print Despite Multi-Year Amazon Deal * Seanergy’s Shipping Rates Set to Rebound While Equity Raises Will Reduce Debt, Says Analyst * 3 Under-The-Radar Cannabis Stocks Ready to Bounce * AstraZeneca Seeks To Make 2 Billion Covid-19 Vaccine Doses With New Supply Deals