Broadcom AVGO reported fiscal third-quarter results above our expectations on the top and bottom line. However, guidance for the fiscal year was maintained, leading us to believe the second half of this fiscal year was more front-load than expected. For its semiconductor solutions segment, CEO Hock Tan noted demand has bottomed out but will continue to remain at these levels due to the uncertain macro environment. We were pleased to hear that the ongoing trade war has not further impacted Broadcom's business, reinforcing our belief that even with trade tensions, impacts will be temporary. All considered, we' re maintaining our $300 fair value estimate, which leaves narrow-moat Broadcom fairly valued as shares are only down 1% in after hours. Third-quarter revenue was $5.5 billion, marking a 9% year-over-year increase. Networking helped drive growth due to switching and routing demand. Broadcom increased content within wireless as the transition from 4G to 5G continued, in addition to strength associated with its Wi-Fi 6 protocol business. Storage and broadband, however, experienced relatively weak demand and do not look to improve anytime soon, per management. Meanwhile, reported adjusted EPS was ahead of our expectations at $5.16, partially driven by further cost reductions related to the integration of CA Technologies. Management noted it expects the acquisition of Symantec's enterprise business to close by Broadcom's first quarter of fiscal 2020. For the entire note, click here.
Abhinav Davuluri, CFA
We attended U.S. Bancorp's USB 2019 investor day, and overall heard no surprises. The bank has churned out industry-leading returns on equity, tangible equity, and assets and plans to continue doing that for the next three years. The bank has an investor every day three years, so the last major update was in 2016. The long-term ROA target was maintained at 1.35%-1.65%, and the ROTE target was maintained at 17.5%-20%. The same was true for the long-term efficiency target, maintained at "low 50s." As such, we do not plan any changes to our fair value estimate.U.S. Bancorp highlighted its strengths throughout the day, which include a strong culture, a good credit underwriting history, a solid mix of low-capital-intensity and highly p rofitable businesses (payments, corporate trust, wealth management), and a solid technology background, which it continues to improve. U.S. Bancorp remains arguably the best-positioned bank among the regionals and can compete with the Big Four when it comes to returns on capital, and we do not see this changing. These are many of the factors that have led to our wide moat rating. U.S. Bancorp may see some top-line growth pressure over the next three years, but returns and competitive positioning should remain strong.
Eric Compton
沒有留言:
張貼留言