Truist Securities Raises Broadcom's Price Target by 30.6% on Impressive Q2 Results

Truist Securities's William Stein raised their price target on Broadcom (NASDAQ: AVGO) by 30.6% from $1,566 to $2,045 on 2024/06/13. The analyst maintained their Strong Buy rating on the stock.

According to Stein's analysis of Broadcom's Q2 2024 report, the company exceeded expectations. Stein noted that while the software division delivered positive results, the main driver behind the beat was Broadcom's AI revenue, which increased by 35% quarter-over-quarter to $3.1 billion. This figure surpassed Truist Securities's projection by 30%.

However, Stein also pointed out that several traditional semi markets, including enterprise storage, broadband, and industrial, fell short of expectations. Despite this, Stein acknowledged that management's revised FY 2024 revenue and EBITDA margin guidance still appeared to be conservative.

Broadcom's Q2 2024 financial highlights include an EPS of $10.96, beating the Zacks Consensus Estimate of $10.79 and showing a 6.2% increase from Q2 2023's $10.32. The company reported revenue of $12.49 billion, surpassing the Zacks Consensus Estimate by 3.71% and showing a significant 43% increase from Q2 2023's $8.73 billion. Additionally, Broadcom's EBITDA reached $7.43 billion, marking a 30.7% year-over-year increase.

Looking ahead, Broadcom's management provided guidance for FY 2024, estimating revenue of $51 billion and EBITDA of $31.1 billion. President & CEO Hock Tan attributed the Q2 results to strong demand in AI and VMware. Tan highlighted that revenue from AI products reached a record $3.1 billion during the quarter, while infrastructure software revenue accelerated as more enterprises adopted the VMware software stack to build their own private clouds. CFO Kirsten Spears added that consolidated revenue grew 43% year-over-year to $12.5 billion, including the contribution from VMware.

In response to the Q2 2024 report, other analysts also updated their ratings and price targets for AVGO on June 13, 2024. Wells Fargo's Aaron Rakers increased their price target by 18.9% to $1,700 and maintained their Hold rating on the stock. Goldman Sachs's Toshiya Hari raised their price target by 19.4% to $1,850 and maintained their Strong Buy rating. Oppenheimer's Rick Schafer raised their price target by 33.3% to $2,000 and maintained their Buy rating.

Overall, 95.5% of the top-rated analysts currently rate AVGO as a Strong Buy or Buy, while 4.5% see it as 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' predictions hold true, AVGO's next yearly EPS will show a 28.5% increase on a year-over-year basis.

AVGO's stock price has seen positive movement since the release of the Q2 2024 report on June 12, 2024. It has risen by 12.3% since then and has shown a significant 97.3% increase compared to the same period the previous year. During this time, AVGO has outperformed the S&P 500, which has experienced a 24.4% increase.

Truist Securities analyst William Stein, who provided the updated rating and price target, is ranked in the top 1% out of 4,602 Wall Street analysts by WallStreetZen. Stein specializes in the Consumer Cyclical and Technology sectors and has an impressive average return of 43.9% and a win rate of 80%.

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. Broadcom operates in two segments: Semiconductor Solutions and Infrastructure Software. Their products are used in various applications, including enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays.

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