AVGO - Embedded Expectations Analysis - 2021 04 30
Broadcom Inc. (AVGO:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 21.0x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management appears concerned about pent-up semiconductor demand, their wireless business ramp-up, and semiconductor solutions revenue growthSpecifically, management may lack confidence in their ability to capture pent-up semiconductor demand, ramp up current gen wireless product shipments, and sustain semiconductor solutions revenue growth. Moreover, they may have concerns about the sustainability of high-volume shipments for WiFi 6 and WiFi 6E and continued weakness in the enterprise networking business. Furthermore, management may lack confidence in their ability to pay down debt, reduce order lead times, and meet their wireless revenue growth guidance. Finally, management may have concerns about bookings backlogs and employee bonus payments, and they may be exaggerating the potential of their new Wifi 6-enabled platforms
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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