Broadcom (AVGO) Received its Third Buy in a Row

By Carrie Williams

After RBC Capital and J.P. Morgan gave Broadcom (NASDAQ: AVGO) a Buy rating last month, the company received another Buy, this time from Oppenheimer. Analyst Rick Schafer maintained a Buy rating on Broadcom today and set a price target of $315. The company’s shares closed yesterday at $227.24.

Schafer commented:

“Broadcom reported F4Q:18 (Oct.) earnings Thursday after the close. Sales/EPS of $5.45B/$5.85 topped consensus $5.4B/$5.58E. FY19 estimates are awkward given the recent inclusion of CA in the model. FY19 sales outlook was $24.5B and includes contribution from CA and excludes the recently divested Veracode and outsourced CA services business. Investors were likely surprised by mgmt’s decision to provide only annual guidance going forward. GM expanded 106bps to 68.4% on favorable product mix and can support 70% longer term. OM should exit FY19 at 51%. Mgmt raised the dividend by 51% and should return ~$12B in FY19 through dividend/buyback. We see CA bolstering AVGO’s emerging capital-allocation story and reiterate our Outperform.”

According to TipRanks.com, Schafer is a top 100 analyst with an average return of 13.3% and a 65.4% success rate. Schafer covers the Consumer Goods sector, focusing on stocks such as Akoustis Technologies, Skyworks Solutions, and Texas Instruments.

Currently, the analyst consensus on Broadcom is a Strong Buy with an average price target of $294.50, implying a 29.6% upside from current levels. In a report issued on December 3, B.Riley FBR also upgraded the stock to Buy with a $300 price target.

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The company has a one-year high of $274.26 and a one-year low of $197.46. Currently, Broadcom has an average volume of 3.68M.

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Broadcom, Inc., is a holding company, which engages in the design, development and supply of analog and digital semiconductor connectivity solutions. It serves four primary end markets: wired infrastructure, wireless communications, enterprise storage and industrial & other.