Broadcom Ltd. (AVGO): Wired Could Outperform Flattish Expectations - RBC
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RBC Capital analyst, Amit Daryanani, reiterated his Outperform rating on shares of Broadcom Limited (NASDAQ: AVGO) and believes that the Wired Infrastructure segment could grow despite expectations for flattish performance.
Fundamentally, the analyst thinks:
1) Wired (~50% of sales) should sustain low-to-mid single digit growth in FY17 and beyond
2) modest underperformance (flat vs. modest growth expectations) LQ reflected STB product/mix issues that should get rectified
3) Data center revenues (~20% of Wired) saw Y/Y growth.
Overall, the analyst sees AVGO benefiting from a) dominant position within enterprise/CSP with leading Ethernet solutions (Tomahawk, Jericho, etc.), and b) Broadband: BRCM has leading presence & 2nd largest competitor (STM) exited the market, creating a $200M+ opportunity over the next 2-3 years.
No change to the price target of $190.
Shares of Broadcom Limited closed at $166.65 yesterday.
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