Boston, MA 05/13/2014 (wallstreetpr) – Semiconductor solutions provider for wired and wireless communications, Broadcom Corporation (NASDAQ:BRCM) shares has been downgraded by Nomura Sdespite the company delivering a 10.9% higher earnings per share for the first quarter than the Street analysts’ estimation. However, the company’s revenue guidance for the second quarter came in below the predictions.
Downgrade
The normal course that any brokerage does is to reduce their revenue or EPS estimate for the particular period if any company provides outlook below the brokerage’s estimations. In this case, Nomura has downgraded the stock to Neutral rating from Buy and also cut down the price target to $30.0 from $33.00.
Analyst Romit Shah of Nomura believes that the company will struggle to maintain its business in wireless and mobile business. They could become a drag on its multiple and that the rest represents a fair value of the broadband and networking businesses during the rest of the current year as well as 2015.
The brokerage’s initial view was that Broadcom should be able to be in a position of win-win year as far as LTE is concerned in the current year failing which it could either scale the business or exit. The scenario meant recovering millions of dollars in operating losses. However, the analyst feels that there could be a third scenario based on recent data, which will not benefit much the shareholders.
Though the analyst indicated that it has considered the progress that Broadcom Corporation (NASDAQ:BRCM) has been making in LTE, it does not meet its estimations as he was expecting incremental improvement.
Immediately after the announcement of the first quarter results, Needham & Co. has downgraded Broadcom shares to Hold from Buy.
1Q Results & Outlook
The company delivered net income of $million or 28 cents a share, which was lower than $191 million or 33 cents a share in the year-ago quarter. On an adjusted basis, net earnings were $318 million or 51 cents a share, down from $400million or 65 cents a share in the year earlier quarter. Analysts’ predicted the company to earn cents a share. Revenue slipped 1% to $1.98 billion but came in above the Street analysts’ predictions of $1.96 billion.
Moving ahead, Broadcom Corporation (NASDAQ:BRCM) sees revenues of $2.0 – $2.1 billion for the second quarter, which is below the analysts’ estimations of $2.05 billion.
