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Broadcom Shares Rise on Analyst Upgrade

Shares of Irvine-based Broadcom Corp. got a lift Tuesday after an analyst raised his rating on the stock citing the prospect of higher sales of chips for servers, PCs, set-top boxes and smartphones.

Broadcom’s stock was up more than 2% on a down morning on Wall Street with a recent market of $15 billion. It closed flat.

Tim Luke of the investment bank arm of Barclays PLC raised his rating on Broadcom to overweight from equal weight, suggesting his clients should buy more of the stock.

Luke upped his price target on Broadcom’s shares to $35 from $30. The shares closed Tuesday at nearly $30.

The analyst said he expects solid third-quarter results and an upbeat fourth-quarter outlook from Broadcom when the company reports earnings on Oct. 20, according to a report on TheStreet.com.

“We believe that Broadcom should see solid upside to its revenues, gross margins and potentially its operating expense guidance for the third quarter,” Luke wrote in a research note. “We believe that Broadcom’s solid bookings in the third quarter may enable the company to provide guidance that is considered constructive by investors.”

Like other chipmakers, Broadcom has been wading through a sluggish market for chips as Corporate America and consumers pause their buying of computers, routers and other electronics.

Luke said he sees demand for electronics with Broadcom chips picking up.

For the third quarter, the analyst said he expects a profit of $173 million, up from an earlier forecast of $159 million.

A year ago, Broadcom saw profits of $248 million.

Luke said he’s looking for Broadcom to post revenue of $1.2 billion, versus the $1.3 billion it reported a year earlier.

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