Shares of semiconductor firm Broadcom (AVGO) fell in after-hours trading. This comes after the company reported earnings for its third quarter of Fiscal Year 2024, which were followed by soft guidance. Earnings per share came in at $1.24, which beat analysts’ consensus estimate of $1.22 per share. It’s worth noting that Broadcom has beaten earnings estimates in each of its past nine quarters:
In addition, sales increased by 47.2% year-over-year, with revenue hitting $13.07 billion. This also beat analysts’ expectations of $12.964 billion. The massive surge in revenue can be attributed to the company’s VMware acquisition and AI semiconductor solutions. However, when removing the VMware portion, revenue grew by 4% year-over-year.
The firm also announced a $0.525 per share dividend, which equates to a 1.33% annual yield. However, it’s worth noting that the current yield is near the low end of its historical range, which indicates that the stock is relatively overvalued compared to the past.
Guidance for Q4 2024:
Looking forward, management has provided the following guidance for Q4 2024:
- Revenue of $14 billion versus analysts’ estimates of $14.037 billion.
- Adjusted EBITDA margin of 64%.
As we can see, the company’s revenue outlook is worse than expected, which likely led to the after-hours drop in the stock price.
Is AVGO Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AVGO stock based on 22 Buys, one hold, and zero Sells assigned in the past three months, as indicated by the graphic below. After an 80% rally in its share price over the past year, the average AVGO price target of $197.05 per share implies 27.7% upside potential.
