Broadcom (AVGO) shares rose Friday after the chipmaker easily topped Wall Street’s targets for its fiscal third quarter and guided higher for the current period. AVGO stock received a slew of price-target hikes after the earnings report.
The San Jose, Calif.-based company late Thursday said it earned an adjusted $6.96 a share on sales of $6.78 billion for the quarter ended Aug. 1. Analysts expected Broadcom earnings of $6.88 a share on sales of $6.76 billion, according to FactSet. On a year-over-year basis, Broadcom earnings rose 29% while sales climbed 16%.
For the current quarter ending Oct. 31, Broadcom expects to generate revenue of $7.35 billion, up 14% year over year. That topped analyst expectations for $7.23 billion in sales in the fiscal fourth quarter.
“Broadcom delivered record revenues in the third quarter reflecting our product and technology leadership across multiple secular growth markets in cloud, 5G infrastructure, broadband, and wireless,” Chief Executive Hock Tan said in a news release. “We are projecting the momentum to continue in the fourth quarter.”
AVGO Stock Rises
In morning trading on the stock market today, AVGO stock rose 1.6%, near 499.65. During the regular session Thursday, AVGO stock dipped 0.3% to 491.90.
Broadcom makes wireless chips for smartphones, such as Apple (AAPL) iPhones. It also makes semiconductors for broadband communications, networking, storage and industrial applications. Plus, Broadcom has a growing business in infrastructure software for mainframes, data centers and cybersecurity.
Semiconductor products accounted for 74% of Broadcom’s revenue in the third quarter. Infrastructure software contributed 26% of sales.
Broadcom’s solid results were led by a notable rebound in smartphone builds, Morgan Stanley analyst Joseph Moore said in a note to clients. Broadcom benefited from strong iPhone production both in unit volumes and in more content per device, he said.
However, supply constraints at contract manufacturers continue to limit upside for Broadcom.
Broadcom Dips Below Buy Point
At least 16 Wall Street analysts raised their price targets on Broadcom stock on Friday. Of those, 15 have buy ratings on AVGO stock while one is neutral.
On Aug. 27, AVGO stock broke out of a 26-week consolidation period at a buy point of 495.24, according to IBD MarketSmith charts. But it dropped out of the 5% buy zone two days later. It returned to the buy zone on Friday.
AVGO stock ranks No. 13 out of 29 stocks in IBD’s fabless chipmaker industry group, according to IBD Stock Checkup. Broadcom stock has an IBD Composite Rating of 95 out of 99. The Composite Rating scores a stock’s key growth metrics against all other stocks regardless of industry group.
Another fabless chipmaker moving on earnings news was Semtech (SMTC). Semtech stock jumped 10.9% to 78.71 on Thursday after posting a beat-and-raise quarterly report late Wednesday.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
YOU MAY ALSO LIKE:
Why Apple Had To Make Another App Store Concession, And Could Face More
Chipmaker’s Shift To AI-Based Computer Vision Taking Hold
Is Apple Stock A Buy After Its June-Quarter Earnings Report?
Find Winning Stocks With MarketSmith Pattern Recognition & Custom Screens
See Stocks On The List Of Leaders Near A Buy Point