Broadcom (BRCM) May Eke Out Q3 Win Amid Macro Pressure
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Broadcom (Nasdaq: BRCM) is trading lower ahead of the company's third quarter earnings report, expected out after the market closes today. Shares are down 1.28% in afternoon trading.
The company is expected to report an EPS of $0.71 on revs of $1.75 billion. Last quarter, the company posted an EPS of $0.52 on revs of $1.6 billion, mixed to the consensus. In Q309, BRCM had an EPS of $0.16 on revs of $1.25 billion.
Shares have increased through the quarter, gaining 6.8% to $35.39 at the end of September. Shares are trading 15.7% higher since the start of 2010, and 4.8% lower since the end of the quarter.
Data from Bloomberg has 22 analysts with a Buy rating, 12 with a Hold, and three recommending to Sell. The analyst price target average is $40, with a High of $48 and a low of $30.
Analyst Ratings Through the Quarter
In August, BMO cut shares from Outperform to Market Perform, while D.A. Davidson also downgraded shares from Buy to Neutral, with a price target reduced from $44 to $35.
At the end of September, Needham & Company kept their Buy rating on the shares, but lowered their price target from $43 to $38. They cite weaker-than-expected demand in computing and consumer end-markets and inventory reduction actions by the supply chain into year-end.
Summary
Goldman Sachs thinks that even a moderate win in Q3 and modest-to-flat guidance for Q410 will drive the stock higher. Catalysts to watch in the coming quarters include (1) handset market share gains driving much higher baseband revenue, with share moving from 3%-4% in early 2010 to over 13% exiting 2011, (2) significant gains in Broadcom’s connectivity business driven by the increased penetration of smartphones and greater penetration of GPS and WiFi, which we believe drives an incremental $3-$4 in dollar content for every feature phone that is cannibalized by a smartphone." Goldman recently added the shares to their Conviction Buy List, and have a six-month price target of $44.00. EPS is expected to be $0.61 on revs of $1.77 billion.
Deutsche Bank sees Broadcom reporting a more in-line quarter, noting that their previous guidance called for a 6% - 12% sequential growth in sales. Growth should be driven by the mobile & wireless segment. They have lowered their estimates tied to macro demand weakness. They expect BRCM's Q410 outlook to be sub-seasonal; DB expects an EPS of $0.52 with revs of $1.58 billion. For the current quarter, DB is looking for an EPS of $0.63 on revs of $1.70 billion.
Broadcom Corp. is expected to release their Q310 earnings on Tuesday, October 26, 2010, at approximately 4:00pm EDT. Stay tuned to StreetInsider.com's EPS Central section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
The company is expected to report an EPS of $0.71 on revs of $1.75 billion. Last quarter, the company posted an EPS of $0.52 on revs of $1.6 billion, mixed to the consensus. In Q309, BRCM had an EPS of $0.16 on revs of $1.25 billion.
Shares have increased through the quarter, gaining 6.8% to $35.39 at the end of September. Shares are trading 15.7% higher since the start of 2010, and 4.8% lower since the end of the quarter.
Data from Bloomberg has 22 analysts with a Buy rating, 12 with a Hold, and three recommending to Sell. The analyst price target average is $40, with a High of $48 and a low of $30.
Analyst Ratings Through the Quarter
In August, BMO cut shares from Outperform to Market Perform, while D.A. Davidson also downgraded shares from Buy to Neutral, with a price target reduced from $44 to $35.
At the end of September, Needham & Company kept their Buy rating on the shares, but lowered their price target from $43 to $38. They cite weaker-than-expected demand in computing and consumer end-markets and inventory reduction actions by the supply chain into year-end.
Summary
Goldman Sachs thinks that even a moderate win in Q3 and modest-to-flat guidance for Q410 will drive the stock higher. Catalysts to watch in the coming quarters include (1) handset market share gains driving much higher baseband revenue, with share moving from 3%-4% in early 2010 to over 13% exiting 2011, (2) significant gains in Broadcom’s connectivity business driven by the increased penetration of smartphones and greater penetration of GPS and WiFi, which we believe drives an incremental $3-$4 in dollar content for every feature phone that is cannibalized by a smartphone." Goldman recently added the shares to their Conviction Buy List, and have a six-month price target of $44.00. EPS is expected to be $0.61 on revs of $1.77 billion.
Deutsche Bank sees Broadcom reporting a more in-line quarter, noting that their previous guidance called for a 6% - 12% sequential growth in sales. Growth should be driven by the mobile & wireless segment. They have lowered their estimates tied to macro demand weakness. They expect BRCM's Q410 outlook to be sub-seasonal; DB expects an EPS of $0.52 with revs of $1.58 billion. For the current quarter, DB is looking for an EPS of $0.63 on revs of $1.70 billion.
Broadcom Corp. is expected to release their Q310 earnings on Tuesday, October 26, 2010, at approximately 4:00pm EDT. Stay tuned to StreetInsider.com's EPS Central section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
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