Broadcom’s Upcoming Q3 Earnings Preview

Analysts at Oppenheimer provided their outlook on Broadcom Inc’s (NASDAQ:AVGO) upcoming Q3 earnings, scheduled to be announced on September 1.

The analysts expect an upside to the Street’s Q3 sales/EPS estimates of $8.4 billion/$9.56 and Q4 guidance of $8.7 billion/$10.04, despite supply limits.

The company is acquiring VMware in a $61 billion cash/stock transaction. The company has secured $32 billion of debt financing and will assume $8.2 billion of VMware’s debt. The analysts estimate a full 2023-year combined free cash flow of $22 billion. They estimate standalone 2022/2023 EPS of $38.18/$41.06. The analysts see significant cost-saving opportunities as management streamlines/focuses on VMware's core cloud virtualization.

According to the analysts, the company’s dominant DC/cloud position, software execution, leading/expanding margin profile and reliable free cash flow return provide a bulwark to macro uncertainty. The analysts reiterated their Outperform rating and $720 price target.