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Broadcom Limited (AVGO) stock: what's the sentiment?

Royston Roche | 8:34 pm ET, 05 Dec 2018

Broadcom Limited (AVGO) shares are trading at $229.90, down -0.04%. The company is announcing its quarterly earnings results on Thursday after the market close.  What's driving Broadcom's stock price? What's AVGO stock price forecast?

Broadcom designs, develops and supplies a range of semiconductor devices with a focus on complex digital and mixed complementary products.  Lately, the stock has performed well: it generated a return of 6% in the past month. The company is available at an attractive forward P/E ratio of 10.86 and is significantly discounted compared to its industry peers.

Investors are showing interest in the company because of the vast market opportunity for 5G technologies. On the other hand, a few bearish investors worry about Apple's revenue slowdown (Apple is Broadcom's major partner).  Last quarter’s revenue rose 13% to $5.07 billion and earnings per share came at $4.98 compared to $4.88 for the same period last year.

Fourth-quarter results will be released after market close on December 06, 2018.  Analysts expect the company to earn $5.55 per share on revenue of $5.39 billion.  The company beat analysts’ estimates in the previous four quarters.

What is the sentiment towards the AVGO stock? Our technical analysis shows that: 

  • The stock short-term sentiment (next 30 days) is trending negative;
  • The mid-term sentiment (3-6 months) is trending negative;
  • The long-term sentiment (9-12 months) is trending positive. 

Over the last month, Broadcom Limited (AVGO) returned +0.37%.

Broadcom Limited (AVGO) average analyst price target ($288.45) is 25.47% above its current price ($229.90).

For the latest price and information on Broadcom Limited, please visit Finstead and search for "AVGO price" or "AVGO news".

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finstead Bites, please send us an email at hi@finstead.com.


Broadcom (AVGO) investors still lamenting the CA Technologies acquisition

Carla Olson | 2:09 pm ET, 06 Sep 2018

Broadcom Limited (AVGO) shares are trading at $215, down 3%. The company is expected to report earnings on September 6 after market close. What's driving AVGO stock price? What's AVGO stock price forecast, and what should investors know about it?

Broadcom shares are down 15% since the company announced the intention to buy CA Technologies for $18.9 billion in mid-July. Investors are skeptical about the deal. But a few experts believe that the deal will add synergies over the long term as the CA Technologies mainframe business is a cash cow.

The shares are now trading at an attractive valuation of 10 times 2019 earnings estimates.  Earnings are expected to grow at a CAGR of 14% over the next five years.

The company will release its third-quarter earnings report after market close on September 06, 2018. Revenue is expected to come at $5.07 billion and EPS at $4.82. The company has a history of beating analyst estimates. Investors will be keenly looking for more details about the CA deal during the earnings call. 

What is the sentiment towards the AVGO stock? Our technical analysis shows that:

  • The stock short-term sentiment (next 30 days) is trending negative;
  • The mid-term sentiment (3-6 months) is trending negative;
  • The long-term sentiment (9-12 months) is trending negative.

Broadcom Limited (AVGO) forward P/E ratio is 10.08, and it’s low compared to its industry peers’ P/E ratio.

Broadcom Limited (AVGO) average analyst price target ($309.95) is 43.1% above its current price ($216.60).

For the latest price and information on Broadcom Limited, please visit Finstead and search for "AVGO price" or "AVGO news".

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finstead Bites, please send us an email at hi@finstead.com.


Broadcom Mum On Qualcomm, But Expected To Raise Price?

Carla Olson | 3:37 pm ET, 08 Dec 2017

Broadcom AVGO

Broadcom (NASDAQ: AVGO) reported solid fiscal fourth-quarter earnings and provided investors with a forecast for the January quarter that was relatively in line with analysts' expectations after factoring in the firm's recent acquisition of Brocade. 

Business conditions still appear quite healthy across most end markets, as the Company will continue to reap the benefits of content gains within Apple's latest iPhone series. Longer term, with Brocade in the fold, the Company also raised a couple of its long-term profitability targets. 

Broadcom management said little on the call about Qualcomm, but we continue to believe that such a deal would be materially accretive to Broadcom. Broadcom may be able to raise its bid price as high as $80 per share and still find the acquisition to be quite accretive. 

Broadcom's revenue in the October quarter was $4.84 billion, up 9% sequentially and 17% year over year and ahead of the midpoint of the firm's previous guidance of $4.80 billion as discussed in early September. 

Wireless revenue was the bright spot, up 33% year over year and up 40% sequentially, again thanks to Broadcom's content gains within Apple's latest iPhones. 

Enterprise storage revenue appears to be cooling off, particularly for chips used in storage hard-disk drives, with sales down 12% sequentially but still up 15% year over year. 

The Firm's largest segment, Wired Infrastructure, saw sales rise 3% year over year but were down 3% sequentially.

Over the last year, AVGO has returned +56.40%. This return is higher than Technology Sector (25.12%), Semiconductor - Broad Line Industry (25.97%), and S&P 500 (17.65%) returns.

Based on Finstead research, AVGO average analyst price target is $295.04 (visit Finbot and type "AVGO price target").

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finstead Bites, please send us an email at hi@finstead.com.


Broadcom Limited (AVGO) Buy or Sell Stock Guide

Updated at: 4:13 am ET, 24 Nov 2018

The analysis below may be helpful to you if you have any of the following questions about AVGO stock:

  • Is AVGO a buy or a sell?
  • Should I sell or hold AVGO stock today?
  • Is AVGO a good buy / a good investment?
  • What are AVGO analyst opinions, recommendations, ratings?

Here are AVGO stock buy reasons/signals:

1. Broadcom Limited's proprietary FBAR filters are well suited to handling a variety of 4G LTE radio frequency signals, and LTE complexity is only expected to rise in the years ahead.

2. Although Broadcom Limited's wireless revenue growth and earnings have been stellar in recent years, global LTE adoption is still in its infancy, giving the firm a nice runway for further growth.

3. Broadcom Limited continues to make reasonable acquisitions in order to expand and diversify, and we anticipate further measured deals in the years ahead.

4. The Semiconductor Industry serves as a driver, enabler and indicator of technological progress. The Internet of Things (IoT) is creating newer avenues and is largely believed to be the next semiconductor growth opportunity with the potential for billions of connected devices. Broadcom’s strong relationships with leading OEMs across multiple target markets have helped it to gain key insights into the requirements of customers.

5. Moreover, Broadcom’s focus on multiple target markets mitigates operating risks and lessens the exposure to volatility in any single market. Based on its expanding product portfolio, the company is well-positioned to address the needs of rapidly growing technologies like IoT and 5G. We believe that Broadcom’s extensive product portfolio, which serves multiple applications within four primary end markets, will help it to gain significant market share going ahead.

6. Avago's merger with Broadcom for a total consideration of $37 billion is arguably the largest of its kind in the semiconductor chip industry and created a behemoth with one of the most diversified communications platforms at combined annual revenues of approximately $15 billion. Synergistic benefits from the merger is likely to increase profitability through economies of scale and mutual sharing of manufacturing expertise, research and development costs and adjustment of staffing expenses.

7. Acquisitions, over time, have been Broadcom’s most favored mode for penetrating unexplored markets. The acquisition of LSI Corporation helped the company to diversify its existing business line from wired infrastructure, wireless and industrial businesses into the storage chip market. The strategic move was aimed at augmenting its revenues, as the industry braces for more consolidation amid a challenging macroeconomic environment.

8. Broadcom generates significant cash flow that enables it to pay consistent dividend. The company paid aggregate cash dividends of $717 million, $716 million and $408 million, during fiscal years 2017, 2016 and 2015, respectively. Due to strong and relatively stable cash flow, we believe that the dividend payout appears sustainable and makes the stock quite attractive.

9. AVGO quarterly revenue growth was 13.40%, higher than the industry and sector average revenue growth (8.05% and 5.22%, respectively).

10. AVGO profitability is improving. The YoY profit margin change was 9.59pp.

11. AVGO forward dividend yield is 2.93%, higher than the industry (0.70%) and sector (0.24%) forward dividend yields.

12. AVGO PEG ratio (P/E adjusted for growth) is 0.84, and it’s low compared to its industry peers’ PEG ratios.

13. AVGO average analyst rating is Buy.

14. AVGO average analyst price target ($288.45) is above its current price ($229.90).

Here are AVGO stock sell reasons/signals:

1. Even with the formation of Broadcom Limited, the combined firm still has significant customer concentration with Apple, and it would be a damaging blow if Apple were to ever switch to another vendor.

2. Pricing on 4G RF components has been robust in recent years, but large customers like Apple and Samsung wield significant pricing power and could exert pricing pressure on vendors like Broadcom over time.

3. Demand within some of Broadcom’s key end markets, like optical networking and enterprise storage, is inherently lumpy, and the firm’s results may face volatility from time to time.

4. A significant portion of Broadcom’s revenue comes from a handful of customers including Foxconn, which accounted for 14% of net revenues in fiscal 2017. Top five direct customers accounted for 40% of the company’s top-line in fiscal 2017 as compared with 30% reported in fiscal 2017. Loss of any of these top five customers can significantly hurt top-line growth.

5. Broadcom operates in a highly competitive market. The company faces significant competition in most of its operating markets that negatively impacts top-line growth. Pricing pressure also keeps margin under pressure.

6. Broadcom’s frequent acquisitions have escalated integration risks. Moreover, we note that the large acquisitions negatively impacted the company’s balance sheet in the form of high level of goodwill and intangible assets, which totaled $40.07 billion or almost 73.5% of total assets as of February 4, 2018.

7. Acquisitions have also negatively impacted Broadcom’s balance sheet, as high indebtedness adds to the risk of investing in the company. As of February 4, 2018, the company had total debt of $17.59 billion.

What are your thoughts on AVGO?

If you liked this analysis, check out Buy or Sell Stock Guides for other stocks.

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finstead Bites, please send us an email at hi@finstead.com.


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