Technology

Earnings Previews: Broadcom, DocuSign, Hewlett Packard Enterprise

This is our last earnings preview for this week covering three stocks that report earnings after markets close on Thursday. Stay tuned, though, because next week brings second-quarter results from a big-name meme stock, a giant software company and a few more specialty retailers.

On Tuesday we previewed earnings reports due after markets close Wednesday or before they open again Thursday: American Eagle Outfitters, ChargePoint and Okta.

Here’s a look at three companies reporting results late Thursday.

Broadcom

Chipmaker Broadcom Inc. (NASDAQ: AVGO) has posted a share price gain of around 48% over the past 12 months, including a gain of about 15% so far in 2021. Wall Street is looking for a sharp increase in profits for the company’s third quarter of fiscal 2021 and an even sharper jump in the fourth quarter, which ends in October. Sales over the past three years have risen by about a third and adjusted earnings by around 50%. Those are big increases for a company Broadcom’s size, and if it can beat them, the stock could easily top its current 52-week high.

Of 32 analysts covering the stock, 24 rate the shares a Buy or Strong Buy, and seven more rate the stock at Hold. At a recent price of around $496, the stock’s upside potential based on a median price target of $534 is 7.7%. At the high target of $585, the implied upside is almost 18%.

Fiscal third-quarter revenue is forecast at $6.76 billion, up 2.2% sequentially and up 16% year over year. Adjusted earnings per share (EPS) are expected to come in at $6.91, up 4.4% sequentially and nearly 28% year over year. For the full fiscal year, analysts expect EPS to total $27.62, up nearly 25%, on a sales boost of 14.2% to $27.29 billion.

The stock trades at 18.0 times expected 2021 EPS, 16.4  times estimated 2022 EPS and 15.5 times estimated 2023 earnings. The stock’s 52-week range is $343.48 to $507.85, and Broadcom pays an annual dividend of $14.40 (yield of 2.89%).

DocuSign

Shares of e-signature software company DocuSign Inc. (NASDAQ: DOCU) have risen by around 33% in the past 12 months, all of it since the beginning of the year. Over the past three years, the stock price is up 376%, with around 90% coming since mid-March of last year, including a jump of nearly 39% in the month of June 2021 alone.

DocuSign stock is included in three of Cathie Wood’s stable of ETFs: ARK Innovation ETF, ARK Next Generation ETF and Ark Fintech Innovation ETF. At the end of March, ARK Invest held nearly 3.2 million shares of DocuSign. By June 30, the holdings had been pared to about 2.8 million shares, and as of Tuesday’s close, the total holding is about 1.9 million shares.

Analysts are strongly bullish on the stock, with 17 of 20 putting a Buy or Strong Buy rating on the shares. Two more rate the stock at Hold. At a price of around $297.10, DocuSign stock has outrun its median price target of $282.50. At the high price target of $386, the upside potential is almost 30%.

For the company’s second quarter of fiscal 2022, analysts are forecasting revenue of $487.99 million, up 4% sequentially and nearly 43% year over year. Adjusted EPS are forecast to come in at $0.40, down 10% sequentially and up 74% year over year. For the full fiscal year, the current forecast calls for EPS of $1.68, up almost 87%, on sales of $2.05 billion, up 41%.

DocuSign stock trades at 178.9 times expected 2022 EPS, 138.8 times estimated 2023 earnings and 102.7 times estimated 2024 earnings. The stock’s 52-week range is $179.49 to $314.76, and DocuSign does not pay a dividend.

Hewlett Packard Enterprise

Hewlett Packard Enterprise Co. (NYSE: HPE) has posted a share price gain of around 63% over the past 12 months. About half the increase has been in 2021. The server and communications equipment maker announced Wednesday morning that it had won a $2 billion contract with the U.S. National Security Agency (NSA) to deliver the company’s high-performance technology to the agency over a period of 10 years.

Of 24 analysts covering the stock, 11 rate the shares a Buy or Strong Buy and 11 others rate the stock at Hold. At a price of around $15.25, the upside potential based on a median price target of $18 is 18%. At the high price target of $20, the upside potential is about 31%.

Fiscal third-quarter revenue is expected to be $6.93 billion, up 3.4% sequentially and about 11.5% year over year. Adjusted EPS are pegged at $0.42, down about 8% sequentially but up about 31% year over year. For the full year, current estimates call for EPS of $1.89, an increase of nearly 40%, on sales of $27.79 billion, up 3%.

The stock trades at 8.2 times expected 2021 EPS and 7.9 times estimated 2022 and 2023 earnings. The stock’s 52-week range is $8.28 to $16.74, and the company pays an annual dividend of $0.48 (yield of 3.14%).