Broadcom Could Scale to Fresh Record High on Upbeat Q4 Earnings; Target Price $632
Chipmaker and software infrastructure supplier Broadcom is expected to report earnings per share of $7.74 in the fiscal fourth quarter on Thursday, which represents year-over-year growth of over 21% from $6.35 per share seen in the same period a year ago.
The San Jose, California-based semiconductor manufacturer would post revenue growth of nearly 14% to $7.35 billion. The company has exceeded consensus earnings per share (EPS) estimates in all four of the last four quarters.
This resulted in very optimistic earnings expectations, prompting several equity analysts to raise their one-year price targets. Susquehanna raised the target price to $650 from $640. Credit Suisse lifted the target price to $620 from $580. UBS upped the target price to $660 from $580. JPMorgan increased the target price to $655 from $600. Oppenheimer raised the target price to $650 from $575.
Broadcom’s better-than-expected earnings results, which will be announced on Thursday, December 9 after the close of trading, could help the stock scale to a fresh record high. Broadcom shares rose 1.6% at $574.04 in pre-market trading on Tuesday and it is on track for third straight session gains. The stock surged over 29% so far this year.
Broadcom Stock Price Forecast
Eleven analysts who offered stock ratings for Broadcom in the last three months forecast the average price in 12 months of $632.00 with a high forecast of $660.00 and a low forecast of $600.00.
The average price target represents an 11.86% change from the last price of $564.98. All of those 11 analysts rated “Buy”, none said “Hold” or “Sell”, according to Tipranks.
Morgan Stanley gave the base target price of $572 with a high of $677 under a bull scenario and $412 under the worst-case scenario. The firm gave an “Overweight” rating on the semiconductor manufacturer’s stock.
Technical analysis suggests it is good to buy as 100-day Moving Average, and 100-200-day MACD Oscillator signals a strong buying opportunity.
“Broadcom (AVGO) is a compelling franchise in semis with diversified end-market exposure, product cycle momentum in wireless and networking, and market leadership. Furthermore, we take a more constructive view than investors on the company’s software strategy, particularly its purchase of Symantec,” noted Joseph Moore, equity analyst at Morgan Stanley.
“While sentiment has gradually improved, AVGO is still trading below the SOX on a P/E basis despite superior margins and FCF. We see an increase in 5G $ content, a rebound in an enterprise, and reacceleration of cloud as tailwinds through 2021; and with the company’s net leverage reduced meaningfully it should be in the position to continue to execute on tuck-in deals in software.”
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