Broadcom (AVGO) to Report Q2 Earnings: What’s in the Cards?


Broadcom


AVGO

is set to report second-quarter fiscal 2022 results on Jun 3.

For the quarter, the Zacks Consensus Estimate for earnings has remained steady at $6.44 per share over the past 30 days and indicates 25.3% growth from the figure reported in the year-ago quarter.

Moreover, Broadcom expects fiscal second-quarter revenues of $6.5 billion. The consensus mark for revenues currently stands at $6.51 billion, suggesting growth of 13.3% from the year-ago quarter’s reported figure.

Notably, the company’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters, the average earnings surprise being 1.4%.

Let’s see how things have shaped up for this announcement.

Factors to Consider

Robust adoption of Wi-Fi 6 in next-generation access gateway, courtesy of solid demand from enterprises, telcos and other service providers, is expected to have contributed to revenue growth across the broadband end market in the fiscal second quarter.

Moreover, demand for cable DOCSIS 3.1 products bodes well. Acceleration in 5G deployment, production ramp up and increase in radio frequency content are expected to have driven top-line growth.

Further, the latest enterprise and residential suite of Wi-Fi 6E-compliant solutions is expected to have benefited this Zacks Rank #3 (Hold) company’s fiscal second-quarter results. You can see

the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

.

Also, incremental adoption of SmartNIC adapters, which enable cloud players to accelerate dynamic workloads in a cost-effective manner in a secure infrastructure, is anticipated to have contributed to Semiconductor solutions’ revenues in the quarter under review.

Notably, the Zacks Consensus Estimate for the Semiconductor solutions segment’s revenues for the fiscal second quarter is pegged at $4.71 billion, suggesting growth of 16.9% on a year-over-year basis.

Additionally, Broadcom’s fiscal second-quarter performance is likely to reflect synergies from the buyouts of CA and Symantec’s enterprise security business. This is anticipated to have aided Broadcom’s Infrastructure software revenues.

Further, the coronavirus crisis-induced work-from-home trend may have favored the adoption of cloud-based infrastructure software solutions, which is likely to get reflected in the to-be-reported quarter’s top line.

Notably, the Zacks Consensus Estimate for the Infrastructure Software segment revenues for the fiscal second quarter is pegged at $1.79 billion, indicating year-over-year growth of 4.3%.

Key Developments in Q2

During the to-be-reported quarter, Broadcom announced its collaboration with

Alphabet

’s

GOOGL

Google Cloud to migrate its core software solutions to the latter’s cloud environment.

What Our Model Says

According to the Zacks model, the combination of a positive

Earnings ESP

and Zacks Rank #1, 2 (Buy) or 3 increases the odds of an earnings beat. But that is not the case here.

Broadcom has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our

Earnings ESP Filter

.

Stocks to Consider

Here are a couple of companies you may want to consider, as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:


Zoom


ZM

has an Earnings ESP of +0.93% and a Zacks Rank #2.


Digital Turbine


APPS

has an Earnings ESP of +6.98% and a Zacks Rank #2.

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