Chipmaker Broadcom Tops Q1 Earnings Estimates; Target Price $525

Chipmaker and software infrastructure supplier Broadcom reported better-than-expected earnings and revenue in the fiscal second quarter and expects revenue above analysts’ expectations for the current quarter.

The semiconductor manufacturer said its revenue climbed to $6.61 billion during the quarter ended May 2, 2021, up from $5.74 billion seen in the same period a year ago. That was above the Wall Street consensus estimates of $6.51 billion.

On an adjusted basis, the global semiconductor leader earned $6.62 per share, higher than the market expectations of $6.43 per share.

Broadcom forecasts its third quarter of the fiscal year 2021, ending August 1, 2021, revenue at nearly $6.75 billion and adjusted EBITDA at about 60%. That was higher than the Wall Street consensus estimates of $6.6 billion.

But the upbeat results did not help stocks, which fell about 2% to $464.8 on Thursday. The stock rose over 6% so far this year.

Analyst Comments

“Upside on broadband and wireless drove a beat in the quarter. Broadcom expects strength in semiconductors to continue into the July quarter, led by strength in broadband, hyperscale and an improvement in enterprise. Remain Overweight and increase price target to $555,” noted Craig Hettenbach, equity analyst at Morgan Stanley.

Broadcom (AVGO) is a compelling franchise in semis with diversified end market exposure, product cycle momentum in wireless and networking, and market leadership. Furthermore, we take a more constructive view than investors on the company’s software strategy, particularly its purchase of Symantec. While sentiment has gradually improved, AVGO is still trading 7X turns below the SOX on a P/E basis despite superior margins and FCF. We see an increase in 5G $ content, a rebound in enterprise, and reacceleration of cloud as tailwinds heading into 2021. And with the company’s net leverage reduced meaningfully it should be in the position to execute on tuck-in deals in software.”

Broadcom Stock Price Forecast

Seventeen analysts who offered stock ratings for Broadcom in the last three months forecast the average price in 12 months of $525.75 with a high forecast of $575.00 and a low forecast of $440.00.

The average price target represents a 13.11% increase from the last price of $464.80. Of those 17 analysts, 15 rated “Buy”, two rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley raised the stock price forecast to $555 from $538 with a high of $657 under a bull scenario and $404 under the worst-case scenario. The firm gave an “Overweight” rating on the semiconductor manufacturer’s stock.

Several other analysts have also updated their stock outlook. JP Morgan raised the target price to $585 from $570. Cowen lifted the target price to $478 from $470. Piper Sandler increased the target price to $525 from $500. UBS upped the target price to $530 from $510. Citigroup raised the price target to $500 from $470.

“A very clean F2Q beat on broad-based robust demand with an above consensus F3Q outlook on continuation of existing trends. Cloud/networking spending remains resilient with surprisingly resurgent Broadband trends offsetting continued soft but set to improve Enterprise spending,” noted Matthew D. Ramsay, equity analyst at Cowen.

“As expected, Wireless was down on seasonally with consistent contributions via Software. PT to $478, reit Market Perform,”

Check out FX Empire’s earnings calendar

Best Dividend Stocks May 2021

The hallmark way I go about finding the best dividend stocks…the outliers, is by looking for quiet Big Money trading activity. Oftentimes, that can be institutional activity. I’ll go over why following the Big Money is so important in a bit. But, the 5 stocks I see as long-term dividend growth candidates are AAPL, BLK, LOW, AVGO, & GRMN.

Over decades, I’ve learned that the true tell on great stocks is that big money consistently finds its way into the best companies out there… especially dividend paying stocks. Some of the biggest returns ever have come from holding stocks for many years and reinvesting dividends.

I want the odds on my side when looking for the highest quality dividend stocks…and I own many of them.

So, let’s get into it.

Up first is Apple, Inc. (AAPL), which happens to be the largest company on planet earth. They are a technology firm with popular products like iPhones, iPads, & iTunes.

Let’s first start with the technical picture.

When deciding on a strong candidate for long-term dividend growth, I like to look for stocks seeing upward momentum:

  • 1 month performance (+10.98%)
  • Historical Big Money buy signals

Below are the Big Money signals Apple has made since 2017. Green bars are showing that AAPL was likely being bought by an institution according to MAPsignals. Typically, the more Big Money signals, the stronger the stock:

Chart, line chart Description automatically generated

Source: MAPsignals, End of day data sourced from Tiingo.com

On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, AAPL has a strong dividend history:

  • 3-year dividend growth rate (+9.8%)
  • Current dividend per share = .205
  • Forward yield = .61%
  • 3-year earnings growth rate (+13.26%)

Next up is BlackRock, Inc. (BLK), which is a leading asset manager company. They have a long dividend history and shares have been in an uptrend recently.

When deciding on a strong candidate for long-term dividend growth, it’s a good idea to look for many years of dividend increases.

Now let’s look at recent performance:

  • 1 month performance (+7.98%)
  • Historical big money signals

Below are the big money signals that BlackRock has made since 2017. It’s clear the stock has seen green recently.

Chart, line chart Description automatically generated

Source: MAPsignals, End of day data sourced from Tiingo.com

On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, BlackRock has a nice dividend history. Their earnings growth has been stellar as well:

  • 3-year dividend growth rate (+13.2%)
  • Current dividend per share = 4.13
  • Forward yield = 2.03%
  • 3-year earnings growth rate (+2.14%)

Next, I’m looking at Lowes Companies Inc. (LOW), which is a leading home improvements chain. They have a solid dividend history.

When deciding on a strong candidate for long-term dividend growth, recent performance in the shares is important:

  • 1 month performance (+5.92%)
  • Recent Big Money signals

Below are the big money signals that Lowe’s has made since 2017. It’s clear the stock has been in a nice uptrend:

Chart, line chart Description automatically generated

Source: MAPsignals, End of day data sourced from Tiingo.com

On top of technicals, when deciding on the best dividend stock, you should look under the hood to see if the fundamental picture supports a long-term investment. As you can see, LOW has a strong dividend history:

  • 3-year dividend growth rate (+13.3%)
  • Current dividend per share = .60
  • Forward yield = 1.19%
  • 3-year earnings growth rate (+34.66%)

Next, I’m looking at Broadcom, Inc. (AVGO), which is a leading semiconductor company. The shares have been on a tear this year.

When deciding on a strong candidate for long-term dividend growth, recent muted performance is not a bad thing:

  • 1 month performance (-.16%)
  • Recent Big Money signals

Below are the Big Money signals that Broadcom has made since 2017.

Chart Description automatically generated

Source: MAPsignals, End of day data sourced from Tiingo.com

On top of technicals, when deciding on the best dividend stock, let’s check up on the fundamentals. As you can see, Broadcom has a strong dividend history.

  • 3-year dividend growth rate (+47.2%)
  • Current dividend per share = 3.60
  • Forward yield = 3.09%
  • 3-year earnings growth rate (+174.18%)

Lastly, I’m looking at Garmin Ltd. (GRMN), which is a leading navigational company.

When deciding on a strong candidate for long-term dividend growth, I like to look for recent leaders:

  • 1 month performance (+8.99%)
  • Historical Big Money signals

Below are the Big Money signals that Garmin has made since 2017.

Chart, histogram Description automatically generated

Source: MAPsignals, End of day data sourced from Tiingo.com

On top of technicals, when deciding on the best dividend stock, you gotta see if the fundamental picture supports a long-term investment. Garmin has been a steady grower:

  • 3-year dividend growth rate (+5.6%)
  • Current dividend per share = .67
  • Forward yield = 1.9%
  • 3-year earnings growth rate (+13.09%)

The Bottom Line

AAPL, BLK, LOW, AVGO, & GRMN represent solid dividend choices. Given the strong historical dividend growth and Big Money signals, these stocks could be worth an extra look for a dividend investor.

Disclosure: the author holds long positions in personal and managed accounts in GRMN. He doesn’t hold positions in AAPL, BLK, LOW, & AVGO at the time of publication.

To learn more about the MAPsignals process, click here.

Disclaimer