07:26 BRCM Broadcom: Color on quarter (33.67 )
Prudential notes BRCM posted 2% top line growth, better than firm's expectations for 1%. Firm says the stock is not cheap, when you consider that options related expenses were equal to 92% of proforma operating income, but they think that the co's product cycles, and the opportunities for positive upside surprises that those product cycles could provide, will keep investors interested in the stock. Firm raises their tgt to $38, up from $33, which is 31x their Y08, GAAP EPS est of $1.23... Thomas Weisel notes that growth in 4Q06 came from mobile and wireless products, including cellular and Bluetooth. Areas of weakness in 4Q06 included cable set-top boxes, DSL, and digital TV products. Firm says even though inventory builds, especially in Ethernet and DSL, held rev growth down in the second half of 2006 the co grew 37% y/y in 2006. In their view this reflects the continued strength in the co as it garners greater rev per piece of equipment sold while ramping revs in markets such as Bluetooth and Wi-Fi coupled with a recovery in Ethernet switching... CIBC notes that during 4Q06, Wii and iPod provided upside. Firm says Bluetooth, WLAN, cable modem, and switching were strong while set-tops, DSL, and controllers were weaker. Inventory appears to have worked through in most markets. Firm is be pleased to see rev ests remain intact. With BRCM far outspending its rev growth, they do not believe it is the optimal time to own BRCM shares. Firm will watch to see if investments in 65-nm could lead to more aggressive share gains in 2008. Traction in cellular would of course be the big catalyst. |
