Markets Wired

Company Update: Broadcom Corporation (NASDAQ:BRCM) a Buy: Goldman Sachs

November 19
13:01 2014

Shares of chip maker Broadcom Corporation (NASDAQ:BRCM) hit a new 52-week high after Goldman Sachs upgraded the stock to Buy from Neutral last week, saying that the company’s profits are likely to beat expectations in the second half of 2015 and in 2016. Product trends will likely enable Broadcom’s earnings to surpass expectations in the second half of 2015 and in 2016, Goldman analyst Mark Delaney wrote in a note to investors earlier today. Datacenter upgrades, bandwidth expansion for new TVs and digital content, and growth in the number of connected devices amid the Internet of Things trend are among the factors that will enable the earnings beat, according to Delaney. 

Stock Performance

Taking a look at the company’s recent performance, Broadcom Corporation (BRCM) reported second quarter earnings for fiscal 2014 on October 21st.  The company reported actual earnings per share of $0.91 against the consensus Street estimate of $0.84.  This represents year over year growth of 5.3%.  Broadcom posted revenue of $2.26 billion against estimates of $2.18 billion. 

Is this a Buying Opportunity?

There are currently thirty four analysts that we track that cover the stock.  Of those thirty four, twenty one have a Buy rating, one has a Sell rating and twelve have a hold rating.  On a consensus basis this yields a score of 2.59 and a Buy.  The combined price objective of these covering analysts is $41.36, which represents a 41.36% upside difference to the last closing price. 

A recent analyst activity consisted of Cowen and Company boosted their Outperform stance on the company. Cowen and Company has a price target of $40 which represents an upside of 23.50% from the last closing price.  On the date of the report, the stock closed at $40.32

Another research firm weighing in recently was FBR Capital Markets who also reiterated their rating on the stock.  On September 8th FBR Capital Markets boosted their price target on the stock at $46, or a 13.85% upside to the current price.  On the day of the report, BRCM shares closed at $41.04. 

Company Profile

Broadcom Corp. (BRCM) provides semiconductor solutions for wired and wireless communications. Its products offer voice, video, data, and multimedia connectivity in the home, office, and mobile environments. The company operates in three segments: Broadband Communications, Mobile and Wireless, and Infrastructure and Networking. The Broadband Communications segment offers cable, satellite, IP, and terrestrial set-top boxes that enable service providers to deploy a range of features and services for consumers; DSL, cable, and fiber broadband access services; and wireless infrastructure solutions, such as femtocell to enhance cellular coverage and small cell low-powered radio access nodes.

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About Author

Brett Sutton

Brett Sutton

Brett Sutton leads the Multi-Industry equity research team at Markets Wired. Brett has covered the US industrial space for over 6 years and has been an equity research analyst for 11 years.

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