does it have more upside after a strong Q3?

Broadcom Inc (NASDAQ: AVGO) reported market-beating results for its fiscal third quarter on Thursday. Shares are in the green after the bell as the chipmaker issued upbeat guidance on “solid” demand as well.

Broadcom stock has more room to run

Earlier this year, Broadcom said it will buy VMware for $61 billion – an acquisition that, as per CFRA Research’s Angelo Zino, will unlock further upside in the stock price.

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“Hock E. Tan has been instrumental with managing this business, now trying to pivot more towards the software driven environment. After this acquisition, about half the revenue will come from software. We think it’s the right move.”

In an interview with Nicole Petallides of TD Ameritrade Network, he reiterated his “buy” rating on the Broadcom stock and a price objective of $580 that translates to another 16% upside from here.

“The Apple business is their only consumer driven end market. And that’s actually been a fairly good place to be and we think should hold up relatively well.”

Shares are down more than 30% for the year. Also on Thursday, Broadcom announced a quarterly stock dividend of $4.10 a share. Zino added:

“It’s a free cash flow story. We think the company will continue to focus on that dividend story despite the fact that it’s making some big acquisitions.”

Notable figures in Broadcom Q3 earnings report

Net income climbed from $1.80 billion to $3.0 billion

EPS of $7.15 was significantly better than last year’s $4.20

On an adjusted basis, per-share earnings came in at $9.73

Revenue went up 25% year-over-year to $8.46 billion

Consensus was $9.56 and $8.41 billion, respectively

Broadcom noted an annualised growth of 32% in chip sales and 5.0% in infrastructure software – both ahead of the Street expectations.  

For the current financial quarter, Broadcom expects about $8.9 billion in revenue, as per the earnings press release. In comparison, analysts had called for $8.77 billion.