Canaccord Lifts PT on Avgo (AVGO) to $83 Following Q2 Results, LSI Deal
Canaccord Genuity is lifting its price target on Avgo Technologies (Nasdaq: AVGO) from $76 to $83 while maintaining a Buy rating ont he stock post-Q2 results.
Analyst T. Michael Walkley noted the following key points:
- Q1/F14 sales of $701M were above our $678M estimate driven strong Wireless sales for the typically seasonally soft April quarter to Samsung and Chinese handset OEMs. Further, better gross margin versus our estimate resulted in pro form EPS of $0.85 above our $0.77 estimate.
- Post the LSI acquisition, Avago guided Q3/14 to sales of $1.35B at the mid-point, versus our $1.34B estimate. The strong sales guidance was due to ramping FBAR filter sales into TD-LTE smartphones in China and initial sales into Apple¡¦s next-generation iPhone products combined with expectations for stronger Wired Infrastructure and Industrial division sales.
- We believe the LSI acquisition positions Avago as a well-diversified semiconductor company with a balanced exposure to several diverse global growth markets. Longer term, we believe Avago can achieve its $200M savings goals and reach margin targets.
- Following the incorporation of LSI estimates in our model, we update our F14/F15 pro forma EPS estimates from $3.47/$4.13 to $3.98/$5.55.
Avago Technologies closed at $70.79 yesterday.