By Senad Karaahmetovic
Shares of Broadcom (NASDAQ:AVGO) are up about 2% in premarket trading Friday after the chipmaker reported third-quarter results that beat expectations.
Broadcom reported an adjusted FQ3 EPS of $9.73 on revenue of $8.46 billion to top the analyst expectations - EPS of $9.56 on revenue of $8.41 billion. The company said it expects to generate $8.9 billion in FQ4 revenue, topping the consensus of $8.7 billion.
“We expect solid demand across our end markets to continue in the fourth quarter, reflecting continued investment by our customers of next generation technologies in data centers, broadband, and wireless,” AVGO said in a press release.
A Morgan Stanley analyst Joseph Moore said the results show that AVGO is still not experiencing weakness despite a challenging macro backdrop.
“Overall Broadcom results continue to show consistent strength in the company's own business conditions. With cracks starting to form in competitors and customers' near-term demand forecasts, the key to the story will be the durability of the demand they are seeing and the ability of the company to enforce its non-cancellable order backlog,” the analyst said in a client note.
A Jefferies analyst reiterated a Buy rating but cut the price target to $620 from $720.
“We remain Buy-rated AVGO after its JulQ earnings where it posted strength across cloud, enterprise, and telcos, and posited low inventory risk for its components… We estimate its dividend to increase 17% to $19.25, implying a 3.9% div yield. We think the risk is low that AVGO chips become restricted to China (13% of semis revs) given its skew to networking vs compute,” the Jefferies analyst said.