Analysts’ price target
Previously, we saw that Broadcom (AVGO) rose following an optimistic Evercore ISI report on the stock. Analysts’ bullishness toward Broadcom is evident in their median target price for AVGO, of $311, which suggests a 25% upside based on its current trading price. Rivals Texas Instruments’ (TXN) and Qualcomm’s (QCOM) median target prices are closer to their current trading prices. Bullish analysts expect all three stocks to rise by double digits—QCOM and AVGO by more than 40% and TXN by more than 30%—over the next 12 months.
Benzinga reported that Cowen analyst Matthew Ramsay had reduced his price target on Broadcom from $315 to $300. However, even this lower price target is bullish, as he expects application-specific programming computing and AI to drive AVGO’s revenue in the next 12 months.
He reduced his price target because he believes that the failed Qualcomm bid and Broadcom’s lack of effort to acquire Toshiba’s (TOSBF) chip business signal an end to AVGO’s pursuit for large acquisitions. He expects that AVGO might only look at acquisitions under $10 billion, and provide returns to shareholders through dividends and buybacks.
StreetInsider reported that Instinet analyst Romit Shah is bearish on Broadcom and has lowered his price target for the stock from $300 to $250. His bearish outlook comes as he expects declining smartphone sales to impact the company’s wireless business, from which it earned 41.5% of its revenue in fiscal Q1 2018.
Most analysts are bullish on Broadcom. However, weakness in the smartphone market has dragged down the stock. Next, we’ll analyze AVGO stock’s price trends and the extent of its pullback.
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