We Are Buyers of Broadcom Ltd (AVGO) Ahead of FQ3 Results: Pacific Crest

We view the risk/reward as positive and anticipate further upside to our target, says Pacific Crest

Pacific Crest analyst John Vinh previews Broadcom Ltd (NASDAQ:AVGO) ahead of its financial third quarter results, expected September 1st after market close. For Vinh, the risk/reward for the semiconductor giant resonates positively. As such, the analyst reiterates an Overweight rating on AVGO with a price target of $180, which represents just under a 2% increase from where the shares last closed.

The consensus EPS forecast for the quarter is of $2.29, with Vinh expecting revenue and EPS results to fall accordingly with the Street or even better with a modest beat. The analyst cites consolidation of Broadcom’s Classic channel and relevant cost synergies to result in advantageous pricing leverage for the company. For revenue guidance for the financial fourth quarter, Vinh projects slightly lower revenue guidance.

Vinh believes, “While we see slight risk to forward guidance given a more muted iPhone 7 ramp, we anticipate offsets in storage and switching. Further, anticipated cost synergies related to the consolidation of its Broadcom Classic channel could limit downside risk to EPS. We anticipate margin expansion and M&A to support further upside to our target.”

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“We have higher confidence that Broadcom’s content in the iPhone 7 is likely to increase to greater than 20% guidance, as we believe the company has secured both the high-band and mid-band PADs and the hexaplexer in the upcoming iPhone 7,” he concludes.

According to TipRanks, which measures analysts’ and blogger’s success rate based on how their calls perform, four-star analyst John Vinh is ranked #853 out of 4,127 analysts. Vinh has a 49% success rate and yields 5.0% in his annual returns. When recommending AVGO, Vinh earns 49.3% in average profits on the stock.

TipRanks analytics reveal AVGO as a Strong Buy. Based on 22 analysts polled in the last 3 months, 100% rate a Buy on AVGO. The consensus price target stands at $194.80, marking a nearly 10% upside from where the stock is currently trading.

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