(By Balachander) Deutsche Bank (DB) raised its price target on shares of Broadcom Corp. (NASDAQ:BRCM) to $45 from $40, while reiterating its "Buy" rating on the stock.
The bank noted that BRCM delivered better-than-expected 1Q results and guided for solid 2Q growth.
While the co's Mobile segment faces customer product transition headwinds in 2Q, DB expects this dynamic to become a strong tailwind for BRCM in 2H12.
"Overall, BRCM has weathered both the recent downturn and the seasonally softer 1H better than we feared and appears poised to deliver significant growth in revs/EPS in 2H12/2013," the bank wrote in a note.
BRCM reported 1Q revs of $1.83b (flat q/q), better than DBe/Street of $1.80b/$1.78b. The co reported GAAP EPS (con't ops) of $0.41, well above DB estimate of $0.31. Excluding stock comp, BRCM reported PF EPS of $0.65, above DBe/Street of $0.55. For 2Q, BRCM guided revs of $1.9-2.0b (+4-9% q/q) or $1.95b at mid-pt, slightly below DBe/Street of $1.98b (+10% q/q).
On better margins, DB raised its CY12E revs/PF EPS to $8.07b (+9% y/y)/$2.95 from $8.14b (+10% y/y)/$2.78 and CY13E to $9.19b (+14% y/y)/$3.30 from $9.2b (+13% y/y)/$3.18 prior.
Key risks include market share loss and/or lower profitability due to competitive pressure, further deterioration of macro, execution missteps, the bank wrote.
BRCM shares added 22 cents to trade at $36.92 on Wednesday on the NASDAQ.