Last Friday, Broadcom Ltd (NASDAQ:AVGO) posted third-quarter earnings, taking a positive stride with an EPS beat on wireless and enterprise storage strength along with gross margins. However, Broadcom shares dipped on back of a key miss in the prominent wired segment in the sharp note of $20 to $30 million.
Nonetheless, the wireless chip maker roared through the quarter in the bigger picture with wireless growth now guided to accelerate up to over 30% sequentially. Subsequently, MKM analyst Ian Ing reiterates a Buy rating on shares of AVGO, while slightly boosting the price target from $188 to $189, which represents a 10% increase from where the stock is currently trading.
Even though Ing acknowledges that “we see a risk to positive major catalysts ahead given revenue diversification and scarcity and competition for remaining accretive deals,” he remains positive on AVGO’s efficiency as an operator, believing the wireless growth guidance should calm concerns over sharp order cuts and price concessions.
Yet, though the peak wireless quarter shows guidance outclassing the Street’s forecast, Ing points out “go-forward revisions are more a reflection of favorable debt refinancing (nearly $0.20/Y) than fundamentals.”
Ultimately, “Investors need to tone-down expectations that AVGO is a momentum growth story driven by wireless content increases. They are a diversified, solid operator. Their long-term revenue growth target is 5%/Y in the combined entity,” he concludes.
As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, top five-star analyst Ian Ing has achieved a high ranking of #42 out of 4,147 analysts. Ing upholds a 78% success rate and yields 23.9% in his annual returns. When recommending AVGO, Ing realizes 42.2% in average profits on the stock.
TipRanks analytics exhibit AVGO as a Strong Buy. Based on 25 analysts polled in the last 3 months, 100% rate a Buy on AVGO. The 12-month average price target stands at $203.29, marking a nearly 19% upside from where the shares last closed.