Broadcom’s 1Q Profit Soars 26%; Revenue Guidance Tops Estimates

Broadcom delivered better-than-expected first-quarter results and marked significant year-over-year improvements in sales and profitability. Shares of the semiconductor company closed 1.5% higher on Friday.

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Broadcom’s (AVGO) 1Q adjusted earnings of $6.61 per share beat consensus estimates of $6.57 per share and grew 25.9% year-over-year. Revenues rose about 14% year-over-year to $6.66 billion and topped the Street’s estimates of $6.62 billion.

Broadcom’s CEO, Hock Tan, said that “This growth reflects the critical role our technology franchises play in this environment of accelerated digital transformation.” (See Broadcom stock analysis on TipRanks).

For the second quarter, the company expects to generate revenues of approximately $6.5 billion, which is higher than the consensus estimates of $6.33 billion. It forecasts adjusted EBITDA to be approximately 59% of 2Q revenues.

Following its earnings release, Deutsche Bank analyst Ross Seymore raised the stock’s price target to $500 (11% upside potential) from $475 and reiterated a Buy rating. In a note to investors, Seymore stated that the company reported better-than-expected 1Q results mainly driven by broad-based strength across its semiconductor and software segments.

Overall, consensus among analysts is a Strong Buy based on 18 Buys and 4 Holds. Following the past year’s 64.3% rally, the average analyst price target of $516.68 implies further upside potential of about 15% to current levels.