Broadcom’s Unique ‘Restructuring’ Story Presents Good Risk/Reward Here, Says Oppenheimer

In a research report released to investors today, analyst Rick Schafer of Oppenheimer reiterated an Outperform rating on Broadcom (NASDAQ:BRCM) with a $48 price target, ahead of the company’s third-quarter earnings results, which will be reported after Tuesday’s close.

Schafer noted, “We expect results roughly in line with consensus’ $2.2B/$0.84 ests, and see a slightly negative bias to consensus’ $2.1B 4Q revenue ests as Networking and Broadband may mute AAPL-related Connectivity upside. No longer funding a losing baseband effort, BRCM is reinvesting in legacy businesses, giving legs to share gains in Infrastructure and Broadband. GM, FCF and, ultimately, capital allocation/return profiles likely improve markedly in 2015 as cash-burning baseband is scratched from the model. BRCM has pulled back with the group over the past month, off 12% from mid-Sept highs. With shares trading below 10x our CY15E EPS (ex-cash), we believe BRCM’s unique ‘restructuring’ story presents good risk/reward here and are buyers with a $48 target.”

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Rick Schafer has a total average return of 5.3% and a 59.5% success rate. Schafer has a -2.1% average return when recommending BRCM, and is ranked #904 out of 3337 analysts.

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