Pro sees ‘mid-teens upside’ in Broadcom stock after Q4 earnings

on Dec 7, 2023
  • Broadcom reports market-beating results for its fiscal Q4.
  • Mariann Montagne shares her view on $AVGO with CNBC.
  • Broadcom stock is down 8.0% versus its year-to-date high.

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Broadcom Inc (NASDAQ: AVGO) is in focus in extended trading after reporting market-beating results for its fiscal fourth quarter on strong AI chip demand.

Is Broadcom stock worth buying?

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The semiconductor behemoth now forecasts about $50 billion in revenue for fiscal 2024 – including the “transformational” VMware acquisition that it completed last month.

Experts, in comparison, were at $39.2 billion only but it’s unclear if their estimates included VMware. On CNBC’s “Earnings Exchange”, Mariann Montagne of Gradient Investments said today:

We expect synergies coming out of the VMware acquisition will be very powerful. We still think there’s mid-teens upside in this name with a 2.0% dividend yield.

Oppenheimer analyst Rick Schafer also predicted in his recent research note that VMware will boost annual revenue and earnings per share of Broadcom Inc by $15 billion and 9.0%, respectively.

His $1,100 price target on $AVGO suggests about a 20% upside from here.

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Broadcom Q4 financial highlights

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  • Earned $3.52 billion versus the year-ago $3.36 billion
  • Per-share earnings also climbed from $7.83 to $8.25
  • Adjusted EPS printed at $11.06 as per the press release
  • Revenue jumped 4.0% year-over-year to $9.3 billion
  • Consensus was $10.96 a share on $9.28 billion revenue

Other notable figures in the earnings report include $7.3 billion in revenue from semiconductor-solutions and $2.0 billion from infrastructure software segment. According to Mariann Montagne:

What AMD had to say yesterday about artificial intelligence and cloud computing is only positive for Broadcom.

Broadcom Inc sees its adjusted EBITDA coming in at about $30 billion in its new financial year. Its shares have lost about 8.0% in recent weeks.


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