Analysts lift Broadcom numbers after earnings; BofA says AI portfolio 'underappreciated'
Investing.com | Author Davit Kirakosyan
Published Jun 02, 2023 06:42AM ET
Broadcom reports Q2 beat, guides higher
Broadcom (NASDAQ:AVGO) reported better-than-expected FQ2 results, however, shares still trade in the red in premarket Friday.
Broadcom's EPS of $10.32 came in better than the consensus estimate of $10.12. Revenue grew 8% year-over-year to $8.73 billion, compared to the consensus of $8.7B.
According to CEO Hock Tan, Broadcom's Q2 results were driven by demand for next-generation technologies from hyperscale, while enterprise and service providers continued to sustain.
For Q3/23, the company expects revenue of $8.85B, above the consensus estimate of $8.72B. Adjusted EBITDA is expected to be approximately 65% of projected revenue.
BofA analysts assigned a new Street-high price target on AVGO shares of $950. The analysts argue that the chipmaker's AI portfolio is "underappreciated."
"In a bull case scenario where AVGO can grow AI exposure to ~25% of sales (and hold growth rates of non-AI assets at previously mentioned levels), we see incremental $2bn/$3 upside to our sales/EPS estimates."
Goldman Sachs analysts said the company delivered "another solid quarter."
"While management has not updated its through-cycle or long-term revenue growth targets, we believe sustained spending on Generative AI has the potential to support a 'soft-landing' in the near term and drive above-model growth in the medium- to long-term," they wrote in a note.
Furthermore, the company declared a quarterly dividend of $4.60 per share, or $18.4 annualized, for an annual yield of 2.3%. The dividend will be payable on June 30, 2023, to stockholders of record on June 22, 2023, with an ex-dividend date of June 21, 2023.
(Additional reporting by Senad Karaahmetovic)
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