Broadcom
stock was flat Friday after earnings, even as analysts cited optimism for the future of the semiconductor company.
Broadcom reported third-quarter earnings and revenue after the close Thursday that increased from last year and beat Wall Street expectations, according to FactSet.
“We believe Broadcom delivered a very solid earnings report and gave equally encouraging guidance,” Benchmark analyst Cody Acree said in a research note Friday. He increased his price target to $1,106 from $950 and added that he is encouraged by the company’s “strong leverage into the AI market.”
Acree is not alone in his optimistic view of Broadcom’s future. Of the 31 analysts surveyed by FactSet, 23 say the stock is a Buy, seven think it’s a Hold and one rates it as a Sell.
Summit Insight Group analyst Kinngai Chan upgraded shares to Buy from Hold and wrote in a research note that didn’t provide a price target, “we believe AVGO remains one of the best-managed semiconductor companies in our coverage universe.”
Chan’s positive outlook is driven by the belief that upcoming new product cycles will help the company beat financial expectations in the second half of 2024, he said.
On top of reporting an earnings and revenue beat, Broadcom raised its dividend by 14% to $5.25. That was about 3 cents higher than Truist Securities analyst William Stein’s expectations and is “one of the major reasons to own the stock,” he said.
Stein increased his price target to $1,015 from $995 and maintained his Buy rating on the stock.
Broadcom also recently acquired VMware and expects the cloud computing company to meaningfully contribute to the top-line in fiscal 2024, with total revenue expectations of $50 billion. That’s an approximate 40% increase from Broadcom’s fiscal 2023 revenue.
KeyBanc Capital Markets analyst John Vinh wrote maintained his Overweight rating and $1,200 price target on the stock.
“We believe Broadcom’s strong track record of successful acquisitions will provide a meaningful diversification opportunity and long-term growth stability given that the smartphone market continues to saturate at the high end,” he said.
Shares of Broadcom were up 0.5% to $926.61 premarket trading Friday, while
S&P 500
futures have fallen 0.2%,
Dow Jones Industrial Average
futures have declined 0.2%, and
Nasdaq Composite
futures have dropped 0.5%. Coming into the session, Broadcom stock has jumped 65% this year.
Write to Angela Palumbo at angela.palumbo@dowjones.com
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