Bank of America Analyst Raises Broadcom's Price Target to $2,000, Maintains Strong Buy Rating

Bank of America's Vivek Arya raised their price target on Broadcom (NASDAQ: AVGO) by 19% from $1,680 to $2,000 on 2024/06/13. The analyst maintained their Strong Buy rating on the stock.

In a research note to investors, Arya highlighted Broadcom's strong performance in the second quarter of 2024. The company reported a 4% revenue beat and raised its guidance for FY 2024 by $1 billion. Additionally, Broadcom announced a 10-for-1 stock split, making ownership of its stock more accessible to investors and employees.

Arya pointed out that Broadcom has a distinct advantage in the bespoke AI chip market, which complements Nvidia's merchant accelerators. The company's involvement in Ethernet networking also positions it well in the rapidly expanding AI cluster industry. Furthermore, Broadcom's partnership with VMware allows enterprises to easily implement on-premise AI solutions, opening up potential upselling opportunities.

For Q2 2024, Broadcom reported earnings per share (EPS) of $10.96, beating the Zacks Consensus Estimate of $10.79 and showing a 6.2% increase compared to Q2 2023. The company's revenue of $12.49 billion also surpassed expectations and showed a significant 43% increase compared to the same quarter last year. EBITDA for the quarter stood at $7.43 billion, marking a 30.7% year-over-year increase.

Looking ahead, management guided for FY 2024 with revenue projected at $51 billion and EBITDA at $31.1 billion. President and CEO Hock Tan highlighted the company's strong performance driven by AI demand and VMware. He specifically mentioned that revenue from Broadcom's AI products reached a record $3.1 billion during the quarter. CFO Kirsten Spears added that consolidated revenue grew 43% year-over-year to $12.5 billion, including the contribution from VMware.

Other analysts also updated their price targets for Broadcom on June 13, 2024. Wells Fargo's Aaron Rakers raised their price target by 18.9%, from $1,430 to $1,700, while maintaining a Hold rating on the stock. Goldman Sachs's Toshiya Hari raised their price target by 19.4%, from $1,550 to $1,850, and maintained their Strong Buy rating. Oppenheimer's Rick Schafer raised their price target by 33.3%, from $1,500 to $2,000, and maintained a Buy rating.

According to WallStreetZen, 95.5% of top-rated analysts currently rate AVGO as a Strong Buy or Buy, with 4.5% considering it a Hold. No analysts recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that AVGO's upcoming year will deliver earnings per share (EPS) of $30.81. If the analysts are correct, AVGO's next yearly EPS will be up by 28.5% on a year-over-year basis.

Since AVGO's latest quarterly report on June 12, 2024, the stock price has risen by 12.3%. Year-over-year, the stock has seen impressive growth of 97.3%. During this period, AVGO has outpaced the S&P 500, which has grown by 24.4%.

Bank of America analyst Vivek Arya is ranked in the top 1% of Wall Street analysts by WallStreetZen, with an average return of 23.5% and a win rate of 61.2%. Arya specializes in the Consumer Cyclical and Technology sectors.

Broadcom Inc. designs, develops, and supplies various semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide. The company operates in two segments, Semiconductor Solutions and Infrastructure Software. Its products are used in various applications, including enterprise and data center networking, home connectivity, set-top boxes, and smartphones. Broadcom Inc. was incorporated in 2018 and is headquartered in San Jose, California.

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