What to Expect When Broadcom Reports After the Close

Broadcom Inc. (NASDAQ: AVGO) is scheduled to release its fiscal third-quarter financial results after the markets close on Thursday. The consensus estimates call for $5.13 in earnings per share (EPS) and $5.54 billion in revenue, up from the $4.98 per share and $5.07 billion posted in the same period of last year.

Some mergers are never formally consummated and never formally ended, as far as a lack of corporate communications is concerned. The would-be acquisition of Symantec by Broadcom was one of those deals that was not formally on the table, and it remains to be seen whether the companies issue that press release.

While multiple media and analyst reports had discussed an acquisition of Symantec Corp. (NASDAQ: SYMC), Broadcom’s hopes of acquiring the company appear to be dashed. CNBC reported in July that these two technology companies have ceased merger negotiations. Symantec would not accept a buyout of less than $28 per share, according to CNBC.

As for the price of the deal, it would have valued Symantec at just over $17 billion. A report from Jefferies in the prior week valued Symantec at about $24 per share. At roughly the same time, Wedbush Securities said that it believed that $26 to $28 per share would be the sweet spot range in which a deal likely would have been consummated.

Broadcom is lucky this deal is off the table. By making a diversification acquisition of CA already, the company’s organic growth looks like it may have peaked. After all, we are talking about the company that is already the merger of Broadcom and Avago. It also was among the companies laying off the most workers in 2018.

Excluding Thursday’s move, Broadcom had underperformed the broad markets, with its stock up 17% year to date. In the past 52 weeks, the stock was up 24%.

A few analysts weighed in on Broadcom ahead of the report:

  • Susquehanna Bancshares has a Buy rating and a $315 price target.
  • Cascend Securities has a Buy rating with a $330 price target.
  • Loop Capital has a Buy rating with a $310 target price.
  • Daiwa Capital Markets has a Neutral rating.
  • Mizuho’s Buy rating comes with a $330 target price.
  • KeyCorp has an Overweight rating with a $330 price target.

Shares of Broadcom traded up marginally at $300.50 on Thursday, with a 52-week range of $208.23 to $323.20. The consensus price target is $307.08.

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