Why Broadcom Stock Gained Today
What happened
Shares of Broadcom (NASDAQ: AVGO) have gained today, up by 3% as of 12:40 p.m. EDT, after the company reported fiscal third-quarter earnings. The results topped expectations and Broadcom issued an optimistic outlook.
So what
Revenue in the fiscal third quarter was $5.82 billion, ahead of the $5.76 billion in sales that Wall Street was looking for. That translated into adjusted earnings per share of $5.40, beating the consensus estimate of $5.24 per share in adjusted profits. Adjusted EBITDA was $3.3 billion and free cash flow was $3.1 billion.
Image source: Getty Images.
"We delivered third quarter revenue results in-line with our expectations, driven by healthy demand from cloud and telecom customers, which more than offset the expected reset in wireless," CEO Hock Tan said in a statement. "Our outlook for the fourth quarter reflects a strong anticipated ramp in wireless, as well as the continuing surge in demand for networking from cloud and telecom customers, more than offsetting expected softness in enterprise."
Now what
Broadcom had previously told investors that the production ramp at its "large North American mobile phone customer," referring to Apple, would be slightly later this year. The revenue associated with annual iPhone launches would start to tick higher in the fiscal fourth quarter instead of the fiscal third quarter. The COVID-19 pandemic has created delays throughout consumer electronics supply chains this year, and Apple is expected to release the iPhone 12 later than usual.
"And given the continuing surge of demand in networking and the expected 5G phone ramp in wireless, we expect a mid-teens percentage sequential increase in our fourth fiscal quarter," Tan said on the conference call with analysts.
Guidance for the fiscal fourth quarter calls for revenue of $6.25 billion to $6.55 billion, with adjusted EBIDA of approximately $3.7 billion. Analysts are looking for $6.2 billion in sales.
10 stocks we like better than Broadcom Ltd
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Broadcom Ltd wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of August 1, 2020
Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool recommends Broadcom Ltd. The Motley Fool has a disclosure policy.
