Analyst Note| Abhinav Davuluri, CFA |
Broadcom reported solid first-quarter results with revenue above the midpoint of management’s guidance, thanks to a rebound in wireless revenue stemming from the delayed launch of Apple’s iPhone 12. The firm’s results were also buoyed by healthy networking demand led by cloud data center spending. Broadcom’s product portfolio is well tailored to address the work-from-home environment and we expect continued growth over the course of 2021. We remain positive on Broadcom’s networking, storage, and broadband business units, and we applaud the firm’s integration efforts of its software acquisitions such as Symantec and CA Technologies. Nonetheless, we are maintaining our $350 fair value estimate for narrow-moat Broadcom, and we recommend prospective investors seek a wider margin of safety.