CICC:Raise Broadcom's target price to $275, expecting second-quarter non-GAAP net profit to increase by 43.47% year-on-year.

Broadcom will announce its second quarter results after the market closes this Thursday local time. Zhongjin Research Report predicts that Broadcom's second quarter revenue will be $14.95 billion, a year-on-year increase of 19.7%, and a slight increase of 0.2% quarter-on-quarter; non-GAAP gross margin is expected to be 77.43%; adjusted EBITDA profit margin is 66.78%; non-GAAP net profit is expected to be $7.74 billion, a year-on-year increase of 43.47%, and a decrease of 1.08% quarter-on-quarter, roughly in line with market forecasts. The company also maintains its non-GAAP earnings forecasts for the fiscal years 2025 and 2026, estimated at $6.49 and $7.93 per share, respectively, and continues to rate it as "outperforming the industry". Considering the valuation extension and Broadcom's leadership position in AI data center computing and networking, the target price is raised by 20% to $275, equivalent to forecasted P/E ratios of 42 times and 35 times for fiscal years 2025 and 2026, respectively.