Broadcom Corp. (NASDAQ: BRCM) updated its fourth-quarter guidance on December 9. The semiconductor company that sustains wireless and broadband communications raised its Q4 2014 net revenue estimate to $2.075 – $2.150 billion. Broadcom increased its quarterly dividend by $0.02 per share to $0.14, or $0.56 annually. In addition, the company announced a $1 billion share buyback authorization in 2015.
President and CEO Scott McGregor was pleased with the news, noting, “Today’s update highlights the strength in our core businesses and our commitment to delivering shareholder value. A 17% year-over-year increase in our quarterly dividend demonstrates the confidence in our business strategy and the importance we are placing on capital return.”
Shares of Broadcom opened at $42.28 on December 10. The semiconductor company has a 1-year high of $44.33 and a 1-year low of $27.80. The daily moving average is $43.01 and the 50-day moving average is $41.83. The market cap for Broadcom is $25.27 billion and its P/E ratio is 58.63.
Analyst Mike Burton of Brean Capital maintained a Buy rating on Broadcom Corporation on December 10 with a price target of $53, up from $46. Burton said the company “updated its corporate model for the first time” and “announced a handful of shareholder friendly policies as the company transitions from a growth-oriented to mature and stable growth phase.” Burton likes BRCM because “it will continue to benefit from cost reductions from the wind-down of the baseband business [and] its remaining businesses are #1 or #2 in their respective segments.” Lastly, Burton anticipates “an increasing amount of ‘shareholder friendliness’ in the way of lower stock-based comp., greater share repurchases, and dividend increases.”
Burton has a 74% overall success rate recommending stocks with an average return of +17.7% per recommendation.
Separately on December 10, analyst Ross Seymore of Deutsche Bank also maintained a Buy rating on Broadcom with a price target of $50. Seymore noted that Broadcom highlighted “that slower but more sustainable and profitable growth can improve cash generation that can (and will) be increasingly returned to shareholders.” He continued, “As BRCM delivers these changes, we continue to see upside to consensus EPS [estimates] and valuation. Consequently we are tweaking up our EPS sets, reiterating our Buy rating and raising our P/T to $50.”
Seymore has an 88% overall success rate recommending stocks with an average return of +33.0% per recommendation.
The analyst consensus for Broadcom is Strong Buy.
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Sarah Roden writes about stock market news. She can be reached at [email protected]
