Palo Alto-based Broadcom Inc. (AVGO) is a premier designer, developer and global supplier of a broad range of semiconductor devices, focusing on complex digital and mixed signal complementary metal oxide semiconductor (CMOS) based devices and analog III-V based products. With a market cap of $805.3 billion, Broadcom operates through Semiconductor Solutions and Infrastructure Software segments. It is expected to release its Q4 earnings on Thursday, Dec. 5.
Ahead of the event, analysts expect Broadcom to report a profit of $1.13 per share, up 15.3% from $0.98 per share reported in the year-ago quarter. The company has surpassed Wall Street’s earnings estimates thrice over the past four quarters while missing on one other occasion. Its adjusted EPS for the last reported quarter grew 7.4% year-over-year, reaching $1.02, exceeding the consensus estimates by the same margin.
For fiscal 2024, analysts project Broadcom to report an adjusted EPS of $3.78, down 2.1% from $3.86 in fiscal 2023. However, in fiscal 2025, its adjusted EPS is expected to surge by a massive 36.2% year-over-year to $5.15.
AVGO stock prices have skyrocketed 55.7% in 2024, substantially outperforming the S&P 500 Index’s ($SPX) 21.8% gains and the Technology Select Sector SPDR Fund’s (XLK) 20.6% returns on a YTD basis.
Despite reporting better-than-expected results Broadcom’s stock prices plunged 10.4% in the trading session after the release of its Q3 earnings on Sept. 5. The company reported a massive 47.3% year-over-year surge in net revenues, reaching $13.1 billion, exceeding Wall Street’s topline estimates, driven by continued strength in its AI semiconductor solutions and VMware which the company acquired in Nov. 2023. Despite the massive surge in revenues, Broadcom reported a net loss of $1.9 billion, down from $3.3 billion net income reported in the year-ago quarter. However, the net loss was due to a one-time discrete non-cash tax provision of $4.5 billion.
The company gave a strong Q4 revenue guidance of approximately $14 billion and an adjusted EBITDA guidance of approximately 64% of projected revenue. After the initial drop in prices, Broadcom’s stock surged 20.7% in the five subsequent trading sessions.
The consensus opinion on AVGO stock is strongly bullish, with an overall “Strong Buy” rating. Out of the 33 analysts covering the stock, 30 recommend a “Strong Buy,” and three advise a “Hold” rating. The mean price target of $194.07 suggests a potential upside of 12.2% from current price levels.
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On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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