Canaccord Genuity Reiterates Buy as Broadcom Ltd. (AVGO) Reports Positive 1Q and Guidance
Canaccord Genuity reiterated a Buy rating on Broadcom Limited (NASDAQ: AVGO), and raised the price target to $185.00 (from $175.00), following the company's 1Q earnings report. Broadcom reported pro forma EPS of $2.41, above consensus' $2.30 estimates. Also 2Q non-GAAP EPS guidance of $2.38 was above Cannaccord's $2.11 estimate due to lower operating expenses, as the company has moved some legacy Broadcom businesses into discontinued operations.
Analyst Michael Walkley commented, "Broadcom reported solid Q1/F16 results above our estimates and issued Q2/F16 revenue guidance in line with our expectations and consistent with slowing near-term sales to leading customer Apple. However, overall EPS guidance was above our expectations given initial traction on synergies combined with discontinuing some lower margin legacy Broadcom businesses. We believe management will continue to execute on the recently closed Broadcom acquisition and achieve synergy targets given management’s strong track record in integrating acquisitions. We believe the new Broadcom is a leading global diversified semiconductor company with a broad portfolio of category-leading products and a leading customer base addressing the wireless and wired infrastructure, enterprise & data center networking and storage, IP traffic routing, Home/IoT and Industrial verticals. The first guidance for the combined Broadcom was above our expectations and supports our thesis the company is positioned for solid long-term sales and earnings growth with industryleading margins. We reiterate our BUY rating and increase our price target to $185."
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Shares of Broadcom Limited closed at $133.71 yesterday.