Wells Fargo Cuts EPS Estimates, Downgrades Broadcom (BRCM) to Market Perform

September 19, 2012 7:07 AM EDT
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Price: $54.67 --0%

Rating Summary:
    22 Buy, 32 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 6 | Down: 10 | New: 6
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Despite Broadcom’s (NASDAQ: BRCM) many strengths, analysts at Wells Fargo think most of the good news is already reflected in the stock’s price. As a result, analysts downgraded the stock from Outperform to Market Perform.

Two risks that are causing particular concern are product and competitive risks in Broadcom's mobile & wireless segment and financial model risks, noted analysts.

“In our view, Broadcom’s has not executed well in developing leading edge baseband chips, and we think that Broadcom may be missing out on an interesting opportunity for incremental growth in not having a standalone
applications processor product,” said analyst David Wong.

The earliest Broadcom might have meaningful 4G baseband revenues might be 2014.

As a result, analysts cut GAAP EPS estimate to $1.29 from $1.42 and reduced 2013 EPS estimates to $1.78 from $2.00.

Analyst also cut their price target on the stock to $34-40 from a prior $37-42.

For an analyst ratings summary and ratings history on Broadcom click here. For more ratings news on Broadcom click here.

Shares of Broadcom closed at $36.92 yesterday.

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