Broadcom Receives Price Target Hike from Goldman Sachs Analyst After Stellar Q2 Results

Goldman Sachs's Toshiya Hari raised their price target on Broadcom (NASDAQ: AVGO) by 19.4% from $1,550 to $1,850 on 2024/06/13. The analyst maintained their Strong Buy rating on the stock.

Hari's price target hike was in response to Broadcom's Q2 2024 earnings report, which was released on June 12, 2024. The report revealed "better-than-feared" revenue from VMware and robust revenue from AI semiconductors, which gave the company a "credible upside," according to the analyst. This performance exceeded investor expectations for the quarter. Speaking broadly, Hari characterized Broadcom as a "critical piece of the ongoing AI infrastructure build-out."

For Q2 2024, Broadcom reported earnings per share (EPS) of $10.96, surpassing the Zacks Consensus Estimate of $10.79 and representing a 6.2% increase from Q2 2023's $10.32. Revenue for the quarter stood at $12.49 billion, beating the Zacks Consensus Estimate by 3.71% and showing a significant 43% increase compared to Q2 2023's $8.73 billion. Additionally, EBITDA rose to $7.43 billion, marking a 30.7% year-over-year increase.

Broadcom's management provided guidance for FY 2024, expecting revenue of $51 billion and EBITDA of $31.1 billion. President and CEO Hock Tan attributed the strong Q2 results to AI demand and VMware, highlighting that revenue from AI products reached a record $3.1 billion during the quarter. Tan also noted that infrastructure software revenue accelerated as more enterprises adopted the VMware software stack to build their private clouds. CFO Kirsten Spears added that consolidated revenue grew 43% year-over-year to $12.5 billion, including the contribution from VMware, and increased 12% year-over-year, excluding VMware. Adjusted EBITDA also saw a 31% year-over-year increase to $7.4 billion. Additionally, the company announced a 10:1 forward stock split of Broadcom's common stock to enhance accessibility for investors and employees.

Other analysts also updated their ratings for AVGO on June 13, 2024. Wells Fargo's Aaron Rakers raised their price target by 18.9% from $1,430 to $1,700, maintaining their Hold rating on the stock. Oppenheimer's Rick Schafer raised their price target by 33.3% from $1,500 to $2,000, keeping their Buy rating intact. JP Morgan's Harlan Sur raised their price target by 17.6% from $1,700 to $2,000, and maintained their Strong Buy rating on the stock.

Currently, 95.5% of top-rated analysts consider AVGO as a Strong Buy or Buy, while 4.5% rate it as a Hold. No analysts recommend or strongly recommend selling the stock.

The consensus forecast among analysts predicts that AVGO will deliver earnings per share (EPS) of $30.81 in the upcoming year. If these predictions hold true, AVGO's next yearly EPS will increase 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, AVGO's stock has soared by an impressive 97.3%. During this period, AVGO has outperformed the S&P 500, which has seen a 24.4% increase.

Goldman Sachs analyst Toshiya Hari is highly regarded, ranking in the top 1% out of 4,602 Wall Street analysts according to WallStreetZen. With an average return of 29.9% and a 70.4% win rate, Hari specializes in the Basic Materials and Technology sectors.

Broadcom Inc., headquartered in San Jose, California, designs, develops, and supplies various semiconductor devices. The company focuses on complex digital and mixed signal complementary metal oxide semiconductor-based devices and analog III-V based products worldwide. Broadcom operates in two segments: Semiconductor Solutions and Infrastructure Software. Its product range includes set-top box system-on-chips (SoCs), wireless local area network access point SoCs, Ethernet switching and routing merchant silicon products, and more. The company's products find applications in areas such as enterprise and data center networking, home connectivity, telecommunications equipment, smartphones, and electronic displays.

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