Source: Wall Street See
Bank of America's report significantly raises Broadcom's target stock price by 19% to $2,000, nearly 34% higher than Wednesday's closing price, citing double-digit EPS growth for Broadcom and profitability, free cash flow generation, and ROI in the semiconductor industry are best performing. Broadcom has high-quality products in the smart phone, cloud data center, telecom, and enterprise storage markets.
AI popular stocks$Broadcom (AVGO.US)$Previously-release financial report showed that its second-quarter performance exceeded expectations and raised its full-year performance guidance. Bank of America reiterated its buy rating on Broadcom on Thursday, saying the company is expected to enter the "trillion club." Broadcom's stock price rose more than 15% on Thursday.
Bank of America raised Broadcom's target stock price from $ 1680 to $ 2000 on Thursday, meaning a near 34% increase from Wednesday's closing price of $ 1495.51.
Broadcom's current market cap is about $ 693 billion. If it breaks through the $ 1 trillion mark, Broadcom will be on par with companies such as Microsoft, Apple, Nvidia, Alphabet, Amazon and Meta Platforms, entering the "trillion-dollar club." The bank's analysts said Broadcom's stable semiconductor sales and exposure in multiple long-term product cycles could help it achieve this goal.
The analysts at the bank said that Broadcom's stable semiconductor sales and its exposure in multiple long-term product cycles may help it achieve this goal.
Broadcom's strong second-quarter performance exceeded Wall Street's expectations. Broadcom also announced a 10-for-1 stock split effective July 15. Analysts believe that stock splits of expensive stocks are often bullish signals for stock performance. Bank of America said that the average one-year return after announcing a stock split was 25%, far exceeding the S&P 500 index's average return of 12%.
Broadcom's stock price rose by about 16% in early trading on Thursday and rose more than 12% by the close. Since the beginning of the year, Broadcom's stock price has risen about 51%.
The bank analysts' new target price for Broadcom envisions the stock trading at the high end of its historical range and at a premium level compared to some peers. The analysts said the premium is "reasonable" given that Broadcom's earnings per share (EPS) growth has reached double digits, and its profitability, free cash flow generation, and return on investment are among the best in the semiconductor industry.
Analysts pointed out that the demand for Broadcom chips is not limited to the field of artificial intelligence, and the company has taken measures to repay its debts.
"We rate Broadcom as a buy because it has high-quality diversified exposure in long-term product cycles in the smart phone, cloud data center, telecommunications, and enterprise storage markets. Additionally, Broadcom's EBITDA and free cash flow (FCF) profit margins exceed 45%, making it one of the most profitable semiconductor companies, with expected continued strong cash returns."
In addition to Bank of America, more than ten financial institutions have also raised Broadcom's target price.
Broadcom's current P / E ratio is about 28 times expected earnings, while Nvidia and competitor Marvell Technology's P / E ratios are about 40 times.
Morningstar analysts said, "We continue to believe that Broadcom is in a very advantageous position in the long-term benefits of generated AI investment growth."
GraniteShares holds Broadcom shares through ETFs. Paul Marino, the company's chief revenue officer, said, "After this amazing financial report and the announcement of a 10-for-1 stock split, if you don't own Broadcom's stock, there is a huge loophole in your investment portfolio."
Editor/tolk