UBS Analyst Raises Broadcom Price Target by 7.8% on Strong Buy Rating

UBS's Timothy Arcuri raised their price target on Broadcom (NASDAQ: AVGO) by 7.8% from $1,610 to $1,735 on 2024/06/13. The analyst maintained their Strong Buy rating on the stock.

Arcuri's decision to increase the price target comes after evaluating Broadcom's Q2 2024 earnings report, which was released on June 12, 2024. The analyst noted that the company's upward trends in AI revenue contributed to another strong quarter.

According to the report, Broadcom reported earnings per share (EPS) of $10.96 for Q2 2024, surpassing the Zacks Consensus Estimate of $10.79. This represented a 6.2% increase compared to Q2 2023's EPS of $10.32. Additionally, the company reported revenue of $12.49 billion, beating the Zacks Consensus Estimate by 3.71% and showing a remarkable 43% increase from Q2 2023's revenue of $8.73 billion. The EBITDA also saw a significant YoY increase of 30.7%, reaching $7.43 billion.

Arcuri believes that Broadcom's conservative guidance for FY 2024 suggests that industries unrelated to AI, particularly in the networking sector, have hit rock bottom. However, considering the "massive" demand for GPUs and the usual "attach" rate for networking solutions, the analyst remains optimistic about the company's future performance.

Broadcom's President and CEO, Hock Tan, expressed his satisfaction with the Q2 results, attributing the strong performance to AI demand and the adoption of the VMware software stack by enterprises. Tan announced an increase in the company's FY 2024 guidance, with consolidated revenue projected to reach $51 billion and adjusted EBITDA to account for 61% of revenue. CFO Kirsten Spears highlighted the growth in consolidated revenue and adjusted EBITDA, which increased by 43% and 31% YoY, respectively. Additionally, she announced a 10:1 forward stock split to enhance accessibility for investors and employees.

In addition to Arcuri's rating update, other analysts also shared their views on AVGO on June 13, 2024. Wells Fargo's Aaron Rakers raised their price target by 18.9% to $1,700 and maintained a Hold rating. Goldman Sachs's Toshiya Hari increased their price target by 19.4% to $1,850 and maintained a Strong Buy rating. Oppenheimer's Rick Schafer raised their price target by 33.3% to $2,000 and maintained a Buy rating.

Overall, 95.5% of top-rated analysts currently rate AVGO as a Strong Buy or Buy, while 4.5% consider 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' predictions hold true, AVGO's next yearly EPS will experience a substantial 28.5% increase compared to the previous year.

Since the release of Broadcom's Q2 2024 earnings report on June 12, 2024, the stock price has increased by 12.3%. Year-over-year, the stock has surged by an impressive 97.3%. During this period, AVGO has outperformed the S&P 500, which has seen a 24.4% increase.

UBS analyst Timothy Arcuri is ranked in the top 1% of Wall Street analysts by WallStreetZen, with an average return of 35.7% and a 73.7% win rate. Arcuri specializes in the Technology sector.

Broadcom Inc. is a global semiconductor company that focuses on the development and supply of various semiconductor devices. Their products range from complex digital and mixed signal complementary metal oxide semiconductor-based devices to analog III-V based products. The company operates in two segments: Semiconductor Solutions and Infrastructure Software. They provide a wide range of products for different applications, including set-top box system-on-chips (SoCs), wireless local area network access point SoCs, Ethernet switching and routing merchant silicon products, and more.

Broadcom's Q2 2024 earnings report showcased the company's strong performance, driven by AI demand and the adoption of their infrastructure software. With an optimistic outlook and positive analyst ratings, Broadcom continues to solidify its position in the semiconductor industry.

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