We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Factors Setting the Tone for Broadcom's (AVGO) Q3 Earnings
Read MoreHide Full Article
Broadcom (AVGO - Free Report) is scheduled to release third-quarter fiscal 2020 results on Sep 3.
For third-quarter fiscal 2020, the company anticipates revenues of $5.75 billion (+/- $150 million). The Zacks Consensus Estimate is currently pegged at $5.78 billion, indicating an improvement of 4.8% from the year-ago quarter.
We note that the Zacks Consensus Estimate for earnings has been stable in the past 30 days at $5.23 per share. The figure suggests growth of 1.4% from the prior-year reported figure.
Notably, the company surpassed the Zacks Consensus Estimate in the trailing four quarters by 0.58%, on average.
Factors Likely to Have Influenced Q3 Performance
Momentum in the enterprise business and substantial customer base are expected to have aided Broadcom in expanding presence in the infrastructure software space. This, in turn, is likely to have driven Infrastructure software revenues in the fiscal third quarter.
Moreover, the coronavirus crisis-induced work-from-home trend is expected to have driven the adoption of cloud-based infrastructure software solutions, which is likely to have contributed to the top line in the to-be-reported quarter.
Further, synergies from the acquisitions of CA and Symantec’s enterprise security business are anticipated to have aided Broadcom’s fiscal third-quarter performance. Markedly, Symantec’s enterprise security business contributed more than $400 million to revenues in second-quarter fiscal 2020.
Notably, the Zacks Consensus Estimate for the Infrastructure Software segment revenues for the fiscal third quarter is pegged at $1.596 billion. In second-quarter fiscal 2020, Infrastructure software revenues improved 21% year over year to $1.715 billion.
In the fiscal second-quarter earnings conference, management projected sequential growth in revenues across the broadband end market for the fiscal third quarter, driven by the robust adoption of Wi-Fi 6 in next-generation access gateway, with solid demand from enterprises, telcos and other service providers.
Increasing demand across server storage connectivity, and the robust adoption of data protection controllers from enterprise customers are expected to have bolstered growth in the fiscal third quarter.
However, the company anticipates a decline in semiconductor revenues in the wireless domain for the fiscal third quarter, as its “large North American mobile phone customer”, likely indicating Apple (AAPL - Free Report) , delays the ramp of its next-generation smartphone.
The company is striving to reduce channel inventory globally, especially in Europe and Japan, amid market uncertainty led by the COVID-19 pandemic. This is expected to have led to a “double-digit sequential decline” in recognized shipping revenues in the fiscal third quarter.
Management anticipates resales in the Asia Pacific, particularly China, to have been up sequentially, while remaining regions are expected to have declined.
Notably, a solid uptick of DSL and PON and next-generation cable DOCSIS 3.1 products, and the latest enterprise and residential suite of Wi-Fi 6E-compliant solutions is expected to have aided the segmental performance.
Incremental adoption of SmartNIC adapters, which enable cloud players to accelerate dynamic workloads in a cost-effective manner in a secure infrastructure, is also anticipated to have contributed to Semiconductor solutions’ revenues in the fiscal third quarter.
However, growth is likely to have been limited by a sharp decline in video, particularly in satellite set-top boxes, amid the coronavirus pandemic-led constraints on live sporting events. Further, increasing lead times, particularly in leading-edge processes, is an overhang.
Notably, the Zacks Consensus Estimate for the Semiconductor solutions segment’s revenues for the fiscal third quarter is pegged at $4.158 billion. Notably, in second-quarter fiscal 2020, Semiconductor solutions’ revenues totaled $4.027 billion, down 2% on a year-over-year basis.
Nevertheless, growing expenses on product development and debt financing for acquisitions amid stiff competition from peers, including Qorvo (QRVO - Free Report) and Xilinx in the semiconductor market, are expected to have limited the fiscal third-quarter margins.
Strategic Developments in Q3
The coronavirus crisis has compelled companies globally to alter their spending strategies. Broadcom isn’t immune to the trend.
In fact, during the fiscal third quarter, the company inked a definitive agreement to sell its IoT business to Synaptics Incorporated (SYNA - Free Report) for $250 million. Per the agreement, Synaptics will also gain manufacturing rights to Broadcom’s wireless IoT products and certain rights to its Wi-Fi, Bluetooth and GPS/GNSS products.
Likewise, Broadcom expanded the partnership with HCL Technologies. Per the terms, HCL will be able to expand portfolio with Symantec Enterprise Division (SED) consulting services, which was part of Broadcom’s enterprise security offerings.
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
Factors Setting the Tone for Broadcom's (AVGO) Q3 Earnings
Broadcom (AVGO - Free Report) is scheduled to release third-quarter fiscal 2020 results on Sep 3.
For third-quarter fiscal 2020, the company anticipates revenues of $5.75 billion (+/- $150 million). The Zacks Consensus Estimate is currently pegged at $5.78 billion, indicating an improvement of 4.8% from the year-ago quarter.
We note that the Zacks Consensus Estimate for earnings has been stable in the past 30 days at $5.23 per share. The figure suggests growth of 1.4% from the prior-year reported figure.
Notably, the company surpassed the Zacks Consensus Estimate in the trailing four quarters by 0.58%, on average.
Factors Likely to Have Influenced Q3 Performance
Momentum in the enterprise business and substantial customer base are expected to have aided Broadcom in expanding presence in the infrastructure software space. This, in turn, is likely to have driven Infrastructure software revenues in the fiscal third quarter.
Moreover, the coronavirus crisis-induced work-from-home trend is expected to have driven the adoption of cloud-based infrastructure software solutions, which is likely to have contributed to the top line in the to-be-reported quarter.
Broadcom Inc. Price and EPS Surprise
Broadcom Inc. price-eps-surprise | Broadcom Inc. Quote
Further, synergies from the acquisitions of CA and Symantec’s enterprise security business are anticipated to have aided Broadcom’s fiscal third-quarter performance. Markedly, Symantec’s enterprise security business contributed more than $400 million to revenues in second-quarter fiscal 2020.
Notably, the Zacks Consensus Estimate for the Infrastructure Software segment revenues for the fiscal third quarter is pegged at $1.596 billion. In second-quarter fiscal 2020, Infrastructure software revenues improved 21% year over year to $1.715 billion.
In the fiscal second-quarter earnings conference, management projected sequential growth in revenues across the broadband end market for the fiscal third quarter, driven by the robust adoption of Wi-Fi 6 in next-generation access gateway, with solid demand from enterprises, telcos and other service providers.
Increasing demand across server storage connectivity, and the robust adoption of data protection controllers from enterprise customers are expected to have bolstered growth in the fiscal third quarter.
However, the company anticipates a decline in semiconductor revenues in the wireless domain for the fiscal third quarter, as its “large North American mobile phone customer”, likely indicating Apple (AAPL - Free Report) , delays the ramp of its next-generation smartphone.
The company is striving to reduce channel inventory globally, especially in Europe and Japan, amid market uncertainty led by the COVID-19 pandemic. This is expected to have led to a “double-digit sequential decline” in recognized shipping revenues in the fiscal third quarter.
Management anticipates resales in the Asia Pacific, particularly China, to have been up sequentially, while remaining regions are expected to have declined.
Notably, a solid uptick of DSL and PON and next-generation cable DOCSIS 3.1 products, and the latest enterprise and residential suite of Wi-Fi 6E-compliant solutions is expected to have aided the segmental performance.
Incremental adoption of SmartNIC adapters, which enable cloud players to accelerate dynamic workloads in a cost-effective manner in a secure infrastructure, is also anticipated to have contributed to Semiconductor solutions’ revenues in the fiscal third quarter.
However, growth is likely to have been limited by a sharp decline in video, particularly in satellite set-top boxes, amid the coronavirus pandemic-led constraints on live sporting events. Further, increasing lead times, particularly in leading-edge processes, is an overhang.
Notably, the Zacks Consensus Estimate for the Semiconductor solutions segment’s revenues for the fiscal third quarter is pegged at $4.158 billion. Notably, in second-quarter fiscal 2020, Semiconductor solutions’ revenues totaled $4.027 billion, down 2% on a year-over-year basis.
Nevertheless, growing expenses on product development and debt financing for acquisitions amid stiff competition from peers, including Qorvo (QRVO - Free Report) and Xilinx in the semiconductor market, are expected to have limited the fiscal third-quarter margins.
Strategic Developments in Q3
The coronavirus crisis has compelled companies globally to alter their spending strategies. Broadcom isn’t immune to the trend.
In fact, during the fiscal third quarter, the company inked a definitive agreement to sell its IoT business to Synaptics Incorporated (SYNA - Free Report) for $250 million. Per the agreement, Synaptics will also gain manufacturing rights to Broadcom’s wireless IoT products and certain rights to its Wi-Fi, Bluetooth and GPS/GNSS products.
Likewise, Broadcom expanded the partnership with HCL Technologies. Per the terms, HCL will be able to expand portfolio with Symantec Enterprise Division (SED) consulting services, which was part of Broadcom’s enterprise security offerings.
Broadcom currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>