Report
Valens Research

AVGO - Embedded Expectations Analysis - 2021 07 22

Broadcom Inc. (AVGO:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 19.6x Uniform P/E. Even at these levels, the market is pricing in bearish expectations for the firm, and management appears concerned about enterprise bookings recovery, unaddressed semiconductor demand, and wireless revenue growth.

Specifically, management may have concerns about the pace of recovery of enterprise bookings and the bookings mix of the infrastructure software segment. In addition, they may lack confidence in their ability to execute accretive M&As, capitalize on telco upgrade opportunities, and meet semiconductor gross margin expansion guidance. Furthermore, management may be downplaying concerns about unaddressed semiconductor demand and handset competition in China. Moreover, they may lack confidence in their ability to sustain PON fiber's growth and wireless revenue growth.
Underlying
Broadcom Inc.

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.

Provider
Valens Research
Valens Research

In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:

  • GAAP and IFRS have failed to provide rules for reliable financial statement reporting
  • Stock analyst recommendations are not grounded in disciplined financial analysis
  • Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
  • Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available

We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.

  • Corporate credit ratings remain years behind the fundamental underpinnings of company performance
  • Stock analysts continue to make recommendations with deeply inherent biases
  • Research firms have failed to break down the walls between credit, equity, and macroeconomic research
  • The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming

The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.

Analysts
Valens Research

Other Reports on these Companies
Other Reports from Valens Research

ResearchPool Subscriptions

Get the most out of your insights

Get in touch