AVGO - Embedded Expectations Analysis - 2020 11 06
Broadcom Inc. (AVGO:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 17.1x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management appears concerned about supply chain constraints, their ability to secure investments, and revenue growthSpecifically, management may lack confidence in their ability to further execute their business strategy and invest in their WiFi 6 franchise. They may also have concerns about the impact of the shift in product launches this quarter, the sustainability of the merchant silicon model, and the supply chain constraints brought about by the pandemic. Furthermore, they may lack confidence in their ability to efficiently allocate their capital and maintain current liquidity levels. Finally, they may be exaggerating the benefits of 5G, and they may lack confidence in their ability to drive more synergies to their go-to-market
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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