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What Are Analysts Saying about AVGO’s Stock?


Aug. 26 2016, Updated 10:04 a.m. ET

AVGO’s stock is priced higher than its peers’

Broadcom’s (AVGO) stock has outperformed its peers’ and is making new highs as its fiscal 3Q16 earnings near.

At $177, AVGO is highly priced compared to its peers, which are priced in the range of $40–$70. Its peer group includes Analog Devices (ADI), Texas Instruments (TXN), and Maxim Integrated (MXIM).

AVGO also has high PE (price-to-earnings), PS (price-to-sales), and price-to-FCF (free cash flow) ratios. AVGO has a PE ratio of 62.23, which is higher than the peer average of 25.16. This indicates that investors are willing to pay 62x the stock’s price to secure EPS (earnings per share) of $1.

Let’s see what analysts have to say about AVGO and its peers.

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Analysts’ ratings for AVGO

AVGO is monitored by 28 Wall Street analysts, 96% of whom have “buy” ratings on the stock, even at a price as high as $177. The remaining 4% of analysts have “hold” ratings on the stock. AVGO has a median price target of $190, and it’s currently trading at a discount of 6.7%.

AVGO’s stock could hit its median target if the following events happen:

  • The company reports better-than-expected results.
  • Apple’s iPhone 7 turns out to be a bigger success than iPhone 6s and 6s Plus.

AVGO’s stock could fall to the bearish target of $151 if the opposite of the above occurs.

Analysts’ ratings for AVGO’s peers

TXN and MXIM are already trading near their median price targets of $70 and $40, respectively. If TXN decides to acquire MXIM, both companies’ stocks are likely to reach their bullish targets. TXN has a bullish price target of $92, and MXIM has a bullish price target of $46.

Overall, the analog industry is currently at its peak, and investors and analysts are optimistic about AVGO. You can gain exposure to AVGO and other analog companies by investing in the SPDR S&P 500 ETF (SPY), which has holdings in US equities listed in the S&P 500 Index. It has 0.34% exposure to AVGO, 0.37% to TXN, and 0.10% to ADI.


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