Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Be Ready To Buy Broadcom Stock At Opportunistic Pullback Levels

By MarketBeat.com (Jea Yu )Stock MarketsJan 21, 2021 06:13AM ET
www.investing.com/analysis/be-ready-to-buy-broadcom-stock-at-opportunistic-pullback-levels-200556595
Be Ready To Buy Broadcom Stock At Opportunistic Pullback Levels
By MarketBeat.com (Jea Yu )   |  Jan 21, 2021 06:13AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Semiconductor giant Broadcom (NASDAQ:AVGO) stock been in a powerful uptrend since bottoming out at the height of the COVID-19 pandemic in March 2020. Shares have more than doubled off the lows, rising more than 30% in the last two months of 2020. The rise in shares is backed by solid growth and incredible 73.5% gross margins. The stock pulled back off all-time highs and is tracking with the benchmark S&P 500 index performance year-to-date (YTD) in 2021. The high profile hacking of the SolarWinds Corp (NYSE:SWI) platform triggered a stampede into well-known cybersecurity stocks like Crowdstrike (NASDAQ:CRWD), Palo Alto Networks (NYSE:PANW) and FireEye (NASDAQ:FEYE). Whether these firms saw an uptick in business as a result remains to be seen with the upcoming earnings season. If so, then Broadcom should be a benefactor as well with its Symantec (NASDAQ:NLOK) enterprise security products as well as its Norton and LifeLock products. While cybersecurity is a small but synergistic division within the Company’s ecosystem, it could be an overlooked growth driver in the era of cybersecurity protocols. Prudent investors seeking exposure can monitor these opportunistic pullback levels to consider for entries.

Q4 FY 2020 Earnings Release

On Dec. 10, 2020, Broadcom released its fiscal fourth-quarter 2020 results for the quarter ending October 2020. The Company reported an earnings-per-share (EPS) profit of $6.35 excluding non-recurring items versus consensus analyst estimates of $6.20, a $0.15 beat. Revenues rose 12% year-over-year (YoY) to $6.47 billion beating analyst estimates of $6.43 billion. The Company raised its fiscal Q1 2021 guidance for the quarter ending in January 2021, with revenues of $6.60 billion versus $6.49 billion consensus analyst estimates and adjusted EBITDA of $3.90 billion versus consensus estimates of $3.75 billion. The quarterly dividend was raised by11% to $3.60 per share.

Conference Call Takeaways

Broadcom CEO, Hock Tan, provided color on Q4 performance. Semiconductor Services revenues were $4.8 billion, up 6% YoY. Networking, which represents 35% of the Semiconductor Services saw revenues rise 17% YoY with continued strength in cloud datacenter spending and telco upgrades to Edge and core networks. Broadband represents 14% of Semiconductor Solutions, saw 22% YoY growth driven by the work-at-home trends,

“… and the need for service providers as well as consumer to upgrade broadband connectivity too, as well as within the home. We experienced strong adoption of Wi-Fi 6 in next-generation access gateways in telcos and consumers.”

CEO Tan noted that Broadcom is the leader in this Wi-Fi environment. Wireless revenues represent 31% of Semiconductor Services saw a 43% sequential quarterly growth in Q4 with the launch of a new generation flagship phone by a major client but was down (-9%) YoY due to the one-quarter delay in ramp-up production. Broadcom expects the next quarter to be the peak of the seasonal ramp and expect a return to 50% YoY quarterly growth. Server storage, representing 14% of Semiconductor Services were down (-9%) YoY as the Company expects the bleeding to continue to as much as (-20%) YoY. Infrastructure Software was $1.6 billion, up 36% YoY. Symantec revenues were $380 million, up 10% YoY and up 12% when factoring in the Computer Associates (CA) segment. Bookings have continued to double on an annualized basis which more than offsets declines outside the core enterprise customers. The Company had free cash flow of $3.2 billion, up 36% YoY. Total debt was reduced by $3 billion in the quarter. The Company ended the quarter with $7.6 billion in cash with $12.6 billion of liquidity which includes the $5 billion revolver, ending the quarter with $41.1 billion in debt.

JP Morgan Top Semiconductor Pick for 2021

On Dec. 19, 2020, JP Morgan provided they outlook for semiconductor to grow revenues 5% YoY in 2021. Industry growth is pegged at 8% to 10% and earnings growth at 15% to 18% YoY. This results in semiconductor stocks to garner 15% to 20% upside in 2021 with overweighted stocks to appreciate more than 20%. They named Broadcom as their top semiconductor pick of 2021. Needless to say, share rallied from $432 to a peak of $458.50 on the recommendation into 2021. On Jan. 5, 2021, Broadcom raised $10 billion in various senior note offerings to repay existing notes. The offering is expected to close Jan. 19, 2021. Shares pay a 3.23% dividend yield. Prudent investors looking to gain exposure should monitor opportunistic pullbacks levels for entries.

AVGO Opportunistic Pullback Levels

Using the rifle charts on the monthly and weekly time frames provides a broader view of the playing field for AVGO shares. The monthly rifle chart formed a near parabolic uptrend that peaked near the $462.50 Fibonacci (fib) levelwith a rising 5-period moving average (MA) at still trying to catch up at $399.85 just above the $396.74 fib level. The monthly market structure low (MSL) buy triggered above $292 and a daily MSL triggered about $359.24. The daily market structure high (MSH) formed a sell trigger under $440.66. While the monthly stochastic is stalled out near the 100-band, the weekly stochastic is still trying to trigger a mini pup above the weekly 5-period MA at $439.07. Prudent investors should monitor opportunistic pullback levels at the $427.20 fib, $409.30 fib, $396.74 fib, $384.17 fib and the $374.03 fib. The upside trajectories range from the $478.25 fib up towards the $572.21 fib level.

Broadcom Inc Monthly Chart
Broadcom Inc Monthly Chart

Original Post

Be Ready To Buy Broadcom Stock At Opportunistic Pullback Levels
 

Related Articles

Gary Gordon
Betting The Farm On The Fed By Gary Gordon - Aug 05, 2021 1

According to an index by Goldman Sachs—an index that takes into account the value of the dollar as well as interest rates—U.S. financial conditions are easier than they have ever...

Be Ready To Buy Broadcom Stock At Opportunistic Pullback Levels

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email