AVGO - Embedded Expectations Analysis - 2019 01 23
Broadcom Inc. (AVGO:USA) currently trades below corporate averages relative toUAFRS-based (Uniform) Earnings, with a 16.4x Uniform P/E, suggesting bearish market expectations for the firm. Moreover, management may be concerned about sales growth, their CA technologies acquisition, their enterprises business, and margins
Specifically, management may lack confidence in their ability to expand on mainframe sales and increase operating profitability as they integrate CA, as well as their ability to maintain gross margin. They may also have concerns about their ability to expand enterprise product sales as well as the potential for greater than expected slowdown in this business, and may be exaggerating their ability to improve employee retention and align management through the use of stock incentives. Furthermore, they may be concerned about headwinds related to cycles with carriers and operating investment in Europe and the United States. Finally, they may be concerned about the sustainability of strong results with Brocade's SAN fiber channel switching business, and may be exaggerating cost savings expectations from outsourcing CA's services business
Broadcom, via its subsidiaries, is a designer, developer and supplier of a range of semiconductor and infrastructure software solutions. The company develops semiconductor devices with a focus on digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products. The company provides products that are used in end products such as enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, and factory automation. The company has three segments: semiconductor solutions, infrastructure software and intellectual property licensing.
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