Broadcom Receives a New Rating from a Top Analyst

By Austin Angelo

In a report released yesterday, Rick Schafer from Oppenheimer assigned a Buy rating to Broadcom (NASDAQ: AVGO), with a price target of $315. The company’s shares closed yesterday at $252.07.

Schafer commented:

“Broadcom reports F2Q (Apr) earnings Thurs, June 7. We see results in line with mgmt’s Apr 30 pre-announcement ($5.0B/$4.76) and upside to the Street’s F3Q (Jul) $5.1B/$4.58 led by core Wired and Wireless. The latter should benefit in F3Q from the fall iPhone refresh, where we expect more content gains. F2Q results reflects full contribution from Brocade’s Fibre Channel switch business, helping grow enterprise storage DD(%) Q/Q. Broadcom redomiciled April 4 and expects cash tax rate of 10% beginning F3Q. Mgmt remains committed to returning at least 50% of FCF and we expect accelerated stock repurchases following the $12B authorization announced in April. AVGO should continue its strategy of strategic/accretive M&A and we remain buyers of our top large-cap pick with a $315 target.”

According to TipRanks.com, Schafer is a top 100 analyst with an average return of 16.8% and a 72.4% success rate. Schafer covers the Consumer Goods sector, focusing on stocks such as NXP Semiconductors, Skyworks Solutions, and Texas Instruments.

Currently, the analyst consensus on Broadcom is Strong Buy and the average price target is $311.72, representing a 23.7% upside.

In a report issued on May 18, Cowen & Co. also initiated coverage with a Buy rating on the stock with a $300 price target.

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Based on Broadcom’s latest earnings release for the quarter ending January 31, the company reported a quarterly revenue of $5.33 billion and net profit of $6.23 billion. In comparison, last year the company earned revenue of $4.19 billion and had a net profit of $440 million.

Based on the recent corporate insider activity of 51 insiders, corporate insider sentiment is negative on the stock. Most recently, in March 2018, Kenneth Hao, a Director at AVGO bought 9,854 shares for a total of $348,635.

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