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Broadcom (AVGO) Q4 Earnings Report Preview: What To Look For

AVGO Cover Image
Broadcom (AVGO) Q4 Earnings Report Preview: What To Look For

Fabless chip and software maker Broadcom (NASDAQ:AVGO) will be reporting results tomorrow after market hours. Here's what to look for.

Last quarter Broadcom reported revenues of $8.88 billion, down 0.6% year on year, in line with analyst expectations. It was a mixed quarter for the company, with slight improvement in its operating margin. Its EPS also narrowly outperformed Wall Street's estimates. On the other hand, its inventory levels materially increased and its revenue guidance for next quarter came in slightly below Wall Street's estimates.

Is Broadcom buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Broadcom's revenue to grow 4.1% year on year to $9.28 billion, slowing down from the 15.7% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $10.96 per share.

Broadcom Total Revenue
Broadcom Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company only missed Wall St's revenue estimates once over the last two years, and has on average exceeded top line expectations by 3.1%.

Looking at Broadcom's peers in the processors and graphics chips segment, some of them have already reported Q4 earnings results, giving us a hint of what we can expect. Intel's revenues decreased 7.7% year on year, beating analyst estimates by 4.1% and Lattice Semiconductor reported revenues up 11.4% year on year, exceeding estimates by 0.2%. Intel traded up 7.2% on the results, and Lattice Semiconductor was down 12.3%.

Read our full analysis of Intel's results here and Lattice Semiconductor's results here.

There has been positive sentiment among investors in the processors and graphics chips segment, with the stocks up on average 7.8% over the last month. Broadcom is up 1.8% during the same time, and is heading into the earnings with analyst price target of $1,000.3, compared to share price of $914.21.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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The author has no position in any of the stocks mentioned.

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