After a second straight quarter of above consensus earnings, Broadcom (BRCM) is receiving much love from Wall Street–despite the pounding its stock is taking over margin concerns. FBR, for example, is not worried: It maintains OUTPERFORM, and raises its target from $36 to $38:
The firm [BRCM] is benefitting from
- strong networking and communication end-market demand in Asia
- move to high definition set top boxes
- significant product investments in Bluetooth, Wi-Fi, and other 65nm products.
…we think chip stocks offer meaningful upside. Although recent checks have softened a bit lately, we think global demand is better than feared, inventories seem reasonable, investor expectations are muted, and chip stock valuations are attractive. Investors should aggressively add to favoured names such as MRVL [Marvel], ONNN [On Semiconductor]…and BRCM.
Adding to FBR’s positive sentiments, both Deutsche and Citi believe margin concerns are overblown. Deutsche maintains HOLD, target from $28 to $30. Citi maintains BUY, target price $36.
Apple iPhone (AAPL) Supplier Update: Bad For Broadcom (BRCM), Fine For Marvell (MRVL)* (BRCM, MRVL, LLTC)
Apple (AAPL) Building Far More iPhones Than Expected: Great News For Marvell (MRVL) And Broadcom (BRCM) (MRVL, BRCM, AAPL)