Investing

Earnings Previews: Broadcom, ChargePoint, Lululemon

The holiday-shortened week is drawing to an end with a whimper. There were no earnings reports of note scheduled at any time on Friday or before markets open on Monday. Following this preview, our next roundup will be published Friday and include reports due Monday afternoon and Tuesday morning.

Earlier Wednesday, we covered earnings reports from Ambarella, Hewlett Packard Enterprise and Zoom Video. This preview looks at three notable firms reporting earnings after markets close Thursday, while a separate preview looks at three software companies also expected to share their results then.

Broadcom

Chipmaker Broadcom Inc. (NASDAQ: AVGO) is due to post fiscal second-quarter results. The company’s stock price improved by almost 45% in 2020, and shares have added nearly 9.5% so far in 2021. For the quarter, analysts will be paying attention to the chipmaker’s inventory, as the current chip shortage is likely to pump up profits. Broadcom also issues a lot of its pay in stock, which the company excludes from its adjusted earnings per share (EPS) calculation.

A majority of analysts (17 of 29) have put a Buy rating on the stock, with another 10 rating the stock a Strong Buy. At a recent price of around $476, the implied upside based on a consensus price target of $512.85 is 7.7%. At the high target of $580, upside potential is nearly 22%.

Consensus estimates call for quarterly EPS of $6.42 on sales of $6.51 billion. For the full fiscal year, analysts are looking for EPS of $26.89 on revenue of $26.85 billion.

Broadcom stock trades at a multiple of 17.3 times expected 2021 EPS, 16.4 times estimated 2022 earnings and 15.5 times estimated 2023 earnings. The stock’s 52-week range is $292.41 to $495.14. The average daily trading volume is 2.3 million shares. Broadcom pays an annual dividend of $14.40 (yield of 3.07%).

ChargePoint

Electric vehicle charging station network ChargePoint Holdings Inc. (NYSE: CHPT) has seen its share price decline by around 16% since concluding its March reverse merger with a blank-check company. Since the transaction was announced last September, the share price has more than doubled. The share price reacts to the prospects for adoption of President Biden’s proposed $2.3 trillion infrastructure plan, but the company needs to come up with a way to increase its revenue growth.

Of five brokerages covering the stock, four rate the shares a Buy or Strong Buy. At a price of around $25.50, the implied gain based on a consensus price target of $38.50 is 52%. At the high target of $49, upside potential is 92%.

Consensus estimates call for a per-share loss of $0.01 in the company’s first quarter of fiscal 2022. The consensus revenue estimate of $35.85 million is more than 12% below the prior quarter’s revenue of $42.4 million. For the full fiscal year, the consensus estimates call for a loss per share of $0.33 on sales of $203.9 million.

ChargePoint is not expected to post a profit in 2022 or 2023. The 52-week trading range is $9.75 to $49.98, and the average daily trading volume is almost 6.5 million shares.

Lululemon

Apparel retailer Lululemon Athletica Inc. (NASDAQ: LULU) got off to a rough start in 2020 but recovered to post a share price gain of 50% for the year. Investors have not been as sanguine this year, however, taking the shares down more than 8% so far. Like most retailers, Lululemon faces supply chain problems and higher freight costs, and those issues have weighed on the share price. To give the stock a jolt, the company probably will have to raise guidance.

Analysts’ sentiment on the stock is mixed, with 18 of 35 rating the shares a Buy or Strong Buy and 15 only willing to rate the shares a Hold. At around $319.50 per share, the implied upside to the consensus price target of $385.50 is nearly 21%. At the high target of $465, the upside potential is more than 45%.

Consensus estimates call for first-quarter 2021 EPS of $0.91 on sales of $1.13 billion. For the full year, the forecast includes estimates of $6.47 in EPS and revenue of $5.67 billion.

Shares trade at a multiple of 68.1 times expected 2021 EPS, 49.3 times estimated 2022 earnings and 39.8 times estimated 2023 earnings. Lululemon’s 52-week range is $269.28 to $399.90, and the average daily trading volume is nearly 1.4 million shares. Lululemon does not pay a dividend.