Broadcom Inc. (NASDAQ:AVGO) Just Released Its Yearly Results And Analysts Are Updating Their Estimates

It's been a good week for Broadcom Inc. (NASDAQ:AVGO) shareholders, because the company has just released its latest full-year results, and the shares gained 9.8% to US$1,130. It was a credible result overall, with revenues of US$36b and statutory earnings per share of US$32.98 both in line with analyst estimates, showing that Broadcom is executing in line with expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Broadcom

Following the latest results, Broadcom's 25 analysts are now forecasting revenues of US$49.7b in 2024. This would be a substantial 39% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to climb 16% to US$35.01. Before this earnings report, the analysts had been forecasting revenues of US$51.1b and earnings per share (EPS) of US$35.02 in 2024. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

The consensus has reconfirmed its price target of US$1,060, showing that the analysts don't expect weaker revenue expectations next year to have a material impact on Broadcom's market value. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Broadcom, with the most bullish analyst valuing it at US$1,265 and the most bearish at US$885 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Broadcom's rate of growth is expected to accelerate meaningfully, with the forecast 39% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 12% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 16% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Broadcom to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Still, earnings are more important to the intrinsic value of the business. The consensus price target held steady at US$1,060, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Broadcom. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Broadcom analysts - going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 3 warning signs for Broadcom you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.