Broadcom’s earnings revive investors’ confidence
Previously, we learned that Broadcom (AVGO) stock made a new high on its earnings beat and strong guidance largely because of its integration of CA Technologies. Broadcom maintained its fiscal 2019 revenue guidance of $24.5 billion, above the consensus estimate of $24.33 billion.
On Broadcom’s fiscal 2019 first-quarter earnings call, CEO Hock Tan stated that its semiconductor business would bottom out in the second quarter, primarily because of the Wireless segment, and then rise significantly in the second half.
Such strong earnings and guidance made Wall Street analysts upbeat on Broadcom. Mizuho analyst Vijay Rakesh increased his price target for Broadcom by $10 to $305, and SunTrust Robinson Humphrey analyst William Stein increased his target price by $35 to $339.
Broadcom’s guidance revived investors’ confidence in the entire semiconductor market and sent the stocks of peers Skyworks Solutions (SWKS), Microchip Technology (MCHP), and Texas Instruments (TXN) up 2.86%, 2.5%, and 3.4%, respectively, on March 15. The VanEck Vectors Semiconductor ETF (SMH) rose 2.68%. Broadcom’s guidance also pushed its Wireless segment’s key customer, Apple, up 1.3% on March 15.
The shortcoming of Broadcom’s earnings
The only shortcoming of Broadcom’s fiscal 2019 earnings is that the company has suddenly stopped providing quarterly guidance and will no longer give a sales breakdown of its Semiconductor segment, which includes the Wired, Wireless, Enterprise Storage, and Industrial segments.
Next, we’ll look at Broadcom’s performance in the first quarter of fiscal 2019.
In the first quarter of fiscal 2019, Broadcom earned 76% of its revenue from the Semiconductor Solutions segment.
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