In the wake of steady reports of robust iPhone 5 sales RBC Capital upgraded pick and axe play Broadcom (BRCM) from Sector Perform to Outperform.
The enthusiastic move was punctuated by comments about how Broadcom was poised to benefit from Apple’s continued dominance in the smart phone and tablet market, an RBC Capital analyst commented:
“(Broadcom’s) product pipeline is ripe with potential content and unit increases ahead, as the rate of OpEx growth is set to decelerate, driving operating margins higher. We believe that BRCM’s ability to drive recurring business and steady design wins stems from customized software. As an example, the company remains well-positioned to hold
onto slots at Apple as we expect Apple could grow towards 15% of total revenues in 2012 from 13% in 2011. In addition, we believe BRCM could be in a position to win back market-share from QCOM’s 8960 platform. In 2013-2014, BRCM appears to have integration opportunities ahead outside of upcoming NFC, including power amplifiers and RF content.”
With a price target of $46.00 RBC’s implies a 27.5% upside from Broadcom’s current price of $36.09.
The Bottom Line
Shares of Broadcom [[BRCM have a 1.11% dividend yield, based on last night’s closing stock price of $36.09. The stock has technical support in the $32 price area. If the shares can firm up, we see overhead resistance around the $38-$39 price levels.
Broadcom (BRCM) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.2 out of 5 stars.
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