Broadcom share price forecast after Q1 results

Broadcom Inc. (NASDAQ: AVGO) shares continue to trade in a buy zone after the company reported strong first-quarter results last Thursday.

Outlook remains positive

Broadcom Inc. is an American company that develops and distributes a wide range of semiconductor and infrastructure software products.

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Broadcom reported first-quarter results in March. 03, 2022; total revenue has increased by 15.8% Y/Y to $7.71 billion, while the non-GAAP earnings per share were $8.39 (beats by $0.26).

Semiconductor solutions revenue grew 20% Y/Y to $5.9 billion, and infrastructure software revenue grew 5% Y/Y to $1.8 billion. Adjusted EBITDA for the first quarter was $4,81 billion, and the free cash flow from operations totaled $3,385 billion.

The board of directors declared a $4.41/quarterly share dividend which will be payable on March 31 to stockholders of record as of March 22, 2022.

Total revenue has increased above the expectations (+$100 million), and the company’s management expects the accelerating trends in the upcoming quarters. Hock Tan, President and Chief Executive of Broadcom, added:

Broadcom’s record first-quarter results were driven by strong enterprise demand and continued investments in next-generation technology by hyperscale and service providers. Our second-quarter outlook projects year-over-year growth to accelerate.

The adjusted EBITDA for the next fiscal quarter should be 62.5 percent of projected revenue which is estimated to be approximately $7.9 billion.

Broadcom continues to be the market leader in delivering Wi-Fi 6 and 6E chips to leading phones as well as routers, enterprise access points, and carrier gateways.

Morgan Stanley has a positive view of the shares of Broadcom and reported that the demand for cloud remains “robust,” and software and smartphone are coming in line with estimates.

Morgan Stanley continues to keep a buy rating on Broadcom shares with a $703 target price which implies more than 15% upside potential.

Broadcom has a strong position in the market; it pays a solid dividend and improves its business for long-term growth and advantage.

The current dividend yield stands around 2.8%, Broadcom trades at less than fifteen times TTM EBITDA, and this company could deliver substantial shareholder value for many years to come.

Technical analysis

Broadcom stock is trading down more than 10% after reaching the highest level in 2022 of $672 on January 04, and the current share price stands at $596.

The current support level stands at $550, and if the price falls below this level, it would be a strong “sell” signal.

On the other side, if the price jumps above $625, it would signal trading shares, and the next target could be at $650 resistance or even above.

Summary

Broadcom reported strong first-quarter results last trading week, and the company’s management expects revenue growth in the next fiscal quarter. Morgan Stanley has a positive view of the shares of Broadcom and continues to keep a buy rating with a $703 target price which implies more than 15% upside potential.

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