Analyst: Broadcom Corp.'s Recent Punishment Undeserved

Broadcom Corp.

shares are off nearly 5 percent since last month because of a succession of past mistakes and unlikely threats, an analyst said Friday. The company, which supplies chips for smartphone and tablet makers as well as for set-top boxes, networking and other products, beat quarterly views by a modest margin Thursday and opened Friday up nearly 1 percent at $41.89. Morgan Stanley's Joseph Moore raised his target more than 6 percent, to $50 a share, and said the company's recent punishment by investors is undeserved. Broadcom's depressed stock price "is a function of past mistakes that are unlikely to recur" like its string of ill-fated acquisitions, as well as increasingly unrealistic fears that a major customer like Apple Inc.

could bolt, Moore said. As those worries fade, the stock should move higher, even without further earnings growth, Moore said. Credit Suisse's John Pitzer boosted his target more than 12 percent, to $45, but maintained a Neutral rating, citing slow revenue growth. Broadcom's fourth-quarter revenue increased 3.8 percent beating expectations, and the company forecast a nearly flat first quarter, in line with expectations. Betty Van Hees of Wedbush maintained an Outperform rating Friday, but said Broadcom shares may be "range-bound" until a Barcelona trade show March 2, where she expects the launch of numerous mobile devices that will include Broadcom chips. Van Hees boosted her target 2 percent to $49.