Chipmaker Broadcom Inc (Nasdaq: AVGO) reported better-than-anticipated second-quarter earnings and revenue. The company also issued better-than-anticipated Q3 guidance, citing the continuing adoption of 5G technology. The stock ended Friday’s trading at $475, up $10.20 or 2.19% from the prior close.
The San Jose, California-based company, reported second-quarter revenues of $6.61 billion, up 15% from $5.742 billion in the similar period last year.
For the quarter ended May 2nd, 2021, Broadcom posted GAAP earnings of $1.493 billion, or $3.30 per share, compared with $563 million, or $1.17 a share in the quarter ended May 3rd, 2020.
Excluding the amortization of acquisition-related intangible assets, stock-based compensation expense, restructuring charges, and acquisition-related costs, the 2Q21 non-GAAP net income increased to $2.980 billion, or $6.62 per share, from $2.323 billion, or $5.14 a share in 2Q20.
Wall Street analysts anticipated Broadcom to post earnings of $6.43 a share on sales of $6.51 billion for the reported quarter.
Commenting on the results, CEO Hock Tan said, “Due to the strength in demand for semiconductors across our multiple end markets, we delivered a 20% year-over-year increase in semiconductor revenue.”
Segment-wise,
- Semiconductor solutions posted revenues of $4.820, up 20% from last year.
- Infrastructure software revenues increased 4% y-o-y to $1.790 billion.
Broadcom ended the second quarter of 2021 with cash and cash equivalents of $9.518 billion, a slight decline from $9.552 billion at the end of the earlier quarter. Furthermore, the company generated $3.569 billion in cash from operations at the end of the second quarter while spending $126 million on capital expenditures.
For the current quarter (3Q21), Broadcom anticipates generating sales of $6.75 billion, an increase of 16% from last year. Analysts polled by Thomson Reuters anticipate the company to report sales of $6.59 billion.
Also, the company’s Board has approved a quarterly cash dividend of $3.60 per share, payable on June 30th , 2021.
Following the impressive results, Christopher Rolland, an analyst at Susquehanna analyst reaffirmed the ‘buy’ rating on Broadcom and provided a price target of $540, roughly 15% higher than Friday’s close.
Likewise, Vijay Rakesh, an analyst at Mizuho Securities, maintained the ‘buy’ rating on Broadcom and provided a price target of $520 per share, which is roughly 10% above Friday’s closing price.
The quarterly earnings beat and robust Q3 revenue estimates are expected to keep the stock range-bound with a bullish bias.
The historical price chart indicates that the stock is having solid support at 426. Additionally, the stock is trading above its 50-day moving average, while the stochastics RSI is rising. Therefore, we are anticipating the stock to remain in an uptrend in the short term.
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