Citi Sees 5% FQ2 Growth At Avago Technologies Ltd.

Avago Technologies Ltd. AVGO should post modest sales growth for the current quarter, in spite of a 19 percent sequential decline forecast by its largest customer, Apple Inc. AAPL, an analyst said Tuesday. Citi's Atif Malik reiterated a Buy rating and $160 target on the Singapore-based semiconductor concern, citing wireless growth at both Apple and Samsung as well as Avgo's eventual product diversification. Avago is off about 9 percent during the past month, trading recently at $116.74, down $3.41. Sales related to Apple amounted to more than 10 percent of Avago's $4.27 billion in 2014 revenue, and Malik figures they now account for about 20 percent. Apple on Monday predicted revenue for its current quarter will fall 19 percent to about $47 billion, from $58 billion in its most recently ended period. Apple has seen a 16 percent average seasonal decline for its June quarter during the past three years, according to Malik. But Avago's revenue for its July quarter will increase 5 percent according to Malik, driven by "content gains" for Avago at Samsung. Avago has said its top ten customers accounted for 57 percent of revenue last year, although it didn't singled out Samsung. Malik said Avgo's sales have correlated most strongly with those of Skyworks Solutions Inc. SWKS. Wall Street expects Skyworks' sales will grow 33 percent to 781.81 million for the period ending June 15. Skyworks posts earnings for its March quarter on April 30. Avago agreed in February to pay $606 million, or $8 a share in cash, to acquire Emulex Corp. ELX in a tender offer expected to expire May 4.