Broadcom: Stock Has Tendency to Reverse Earnings-Driven After-Hours Gains

Broadcom (BRCM) is due out with Q1 results tonight, and analysts are expecting a profit of $0.59 per share on revenue of $1.81 billion, according to a survey by Thomson Reuters.

BRCM has tended to favor reversal movement between the sessions, doing so 18 times and putting up wider share moves nine times over the last seven years of quarters we've tracked. Its near-term pattern favors reversals between the sessions as well, doing so in four of the last five quarters.

Looking deeper into the performance data, BRCM has seen an after-hours gain in 15 of the 27 quarters we've tracked, and in 12 of those events, 80% of the time, the stock has seen its gain reverse direction or narrow in the following day's regular session. It has seen an after-hours decline 11 times and one flat evening trade following by a next-day decline. It is about mixed in its negative performance, adding to its declines in next-day trade five times and reversing direction six times.

The historical trading performance follows:

On Feb. 1, 2011, BRCM tumbled 6.1% in night trading despite beating Q4 revenue expectations and setting guidance that straddled the Street view. The stock saw its downside narrow slightly the following day, closing the Feb. 2 regular session off 5.6%.

On Oct. 26, 2010, the stock jumped 11.2% during evening hours as Q3 results sharply beat the year-ago quarter. Shares rose 11.6% the next day.

On July 27, 2010, the stock gained 1.1% during evening trading after Q2 results top the year-ago quarter. Shares fell a slim 0.1% during regular trading.

On April 27, 2010, the stock gained 1.9% during evening trading after swinging to profit and guiding for a revenue beat. Shares rose a slightly slimmer 1.7% the next day.

On Feb. 3, 2010, BRCM advanced 1.4% in evening action after beating Q4 revenue expectations. The stock lost its gain the following day, closing the Feb. 4 regular session down 0.6%.

On Oct. 22, 2009, BRCM slid 8.5% in evening trading after reporting a sharp year-over-year decline in earnings. The stock cut its downside slightly the next day, ending the Oct. 23 regular session down 7.2%.

On July 23, 2009, BRCM lost 4.9% in evening trading on the back of better-than-expected revenue results. The stock continued to head lower the next day, ending the July 24 regular session down 6.8%.

On April 21, 2009, BRCM declined 8.7% in pre-market trading after posting a loss, beating on revenue and setting guidance above the Street estimate. The stock cut its downside in the April 21 regular session, ending down 5.8%.

On Jan. 29, 2009, BRCM declined 4.5% in after-hours trading after reporting a decline in revenue, swinging to a loss and setting guidance below Street estimates. The stock was hit with more selling the next day, dropping 9% by the Jan. 30 regular session close.

On Oct. 21, 2008, the stock gained 9.4% as revenue topped the year-ago result. The gain was reduced to 6.5% the next day.

On July 22, 2008, BRCM declined 7.3% in evening trading after reporting Q2 results up from year ago levels. The stock cut back its declines the next day, closing the July 23 regular session down 5%.

On April 22, 2008, BRCM advanced 8.7% in after-hours trading on the heels of better-than-expected revenue results. The stock jumped even higher the next day, closing out the April 23 regular session up 16.3%.

On Jan. 24, 2008, BRCM jumped 12.2% in evening trading after the company beat with Q4 results. The gain was cut back to 2.5% the next day.

On Oct. 23, 2007, the stock tumbled 11.3% during evening trading as BRCM reported in line with EPS. The loss was an even deeper 17% the next day.

On July 19, 2007, BRCM inched up 1.8% in evening trading after meeting Q2 EPS estimates but just missing on sales. Shares trimmed those slim gains the next day, ending the regular session up 1.3%.

On April 26, 2007, BRCM dropped 6.5% in night trading despite beating Q1 expectations. The company said it had lower-than-normal near-term visibility. Shares cut back their losses the next day, ending the regular session down 4.2%.

On Feb. 8, 2007, BRCM advanced 1.4% in after-hours trading after the company posted in-line EPS, beat on revenue, approved a share buyback program, and set guidance in-line to lower than Street estimates. The stock edged up a bit more in the Feb. 9 regular session, gaining 1.6% by the close.

On Oct. 19, 2006, the stock was up 1.9% in the evening session on the heels of an earnings report that showed sales ahead of the Street but the continuation of the company's options review. Shares did an about-face to end down 5% the next day.

On July 20, 2006, BRCM dropped 8.8% in evening trading after reporting Q2 sales about in line with expectations. The shares fell further the next day, ending regular trading down 12.3%.

On April 20, 2006, shares were up 4.8% on the company's estimate-beating results and its guidance. That gain had fizzled by the closing bell the next day, when shares ended down 4.6%.

On January 26, 2006, BRCM soared 24.4% in night trading after topping Q4 expectations. The shares, though, gave up some of that strength and ended the regular session up 19% the next day.

On October 20, 2005, BRCM gained 5.5% after it beat Q3 expectations and issued in a conference call Q4 sales guidance that was above Street estimates. However, the shares failed to hold their gains the next day, falling 4.1% during the regular session.

On July 21, 2005, BRCM closed up 11.9% in evening trading after reporting Q2 results that topped expectations. The shares gave up a little bit of those gains in the next session, ending up 11.3% the next day.

On April 21, 2005 BRCM rose 2.2% after hours after beating Street expectations. It narrowed that move in the April 22 regular session, closing up only 1.6%.

On Jan. 27, 2005 BRCM fell 3% after hours despite beating the Street view by 1 cent. It narrowed its loss in the Jan. 28 regular session, closing down 2.6%.

On Oct. 21, 2004 the company's stock fell 5.1% after beating expectations but warning of a future slowdown. It widened that move in the Oct. 22 regular session when it lost 13.3%.

On July 22, 2004 BRCM tread water in the after-hours session, ending flat despite posting better-than-expected results. It then fell 6.1% in the July 23 regular session.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.