Broadcom pops as analysts praise 'particularly impressive' Q4, guidance
Justin Sullivan

Broadcom (NASDAQ:AVGO) shares gained more than 3% in premarket trading on Friday after the semiconductor company reported fourth-quarter results that were seen as "particularly impressive," given the operating environment and global economy.
Oppenheimer analyst Rick Schafer, who has an outperform rating and $720 price target on Broadcom (AVGO), noted the results were impressive, especially considering the commentary from its peers surrounding enterprise storage. Schafer also pointed out that Broadcom's (AVGO) management talked up cloud growth for next fiscal year, with overall enterprise spending as "flattish" to up.
And with concerns that wireless revenue will be flat sequentially, due to Apple's (AAPL) iPhone production issues, the company is still operating at a high level, Schafer explained, with its fiscal 2023 backlog covered at 100% despite the uncertain global economy. 
"We believe [management's] strict scrubbing of orders safeguards [Broadcom] better than most from channel inventory surprise," Schafer wrote in a note to clients.
On its earnings call, Broadcom (AVGO) said it still expects its proposed $61B acquisition of VMware (NYSE:VMW) to close next fiscal year. 
"We see [greater than] 10% cash-on-cash return and are bullish on [Broadcom's] record of accretive M&A, execution, and [free cash flow] growth/return," Schafer added. "Networking, wireless, broadband, and software franchises support stable growth. We remain [long-term] buyers."
Truist analyst William Stein, who has a buy rating on Broadcom (AVGO) and raised his price target to $662 from $630 following the results, said the fourth-quarter results and guidance were good, but the dividend increase of 12.2% was seen as "slightly disappointing."
"Investors hoped for explicit [calendar year 2023] guidance, explicit backlog, and explicit lead time commentary, but management was unwilling to provide these, considering well-documented macro headwinds (Covid shutdowns in China, rates, FX, etc.)," Stein wrote. 
Coupled with the fact that the dividend payout ratio was "slightly below" the 50% historical target, Stein said these issues balanced out "management's otherwise surprisingly positive views."
Earlier this week, it was reported that the Federal Trade Commission's review of Broadcom's (AVGO) $61B planned acquisition of VMWare (VMW) was focused on conglomerate effects of the combination.