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Analysts revise Broadcom stock price target after earnings

Analysts revise Broadcom stock price target after earnings
Elmaz Sabovic

The ongoing artificial intelligence rally in the stock market has made companies such as Broadcom (NASDAQ: AVGO) real winners regarding performance, guidance, and stock growth.

For the second quarter fiscal year 2024 results, the company announced on June 12 that it had outperformed analysts’ consensus estimates, reporting adjusted earnings per share of $10.96 compared to the expected $10.84 and revenue of $12.49 billion, surpassing the anticipated $12.03 billion. 

Impressive guidance and AVGO stock split 

Broadcom forecasts approximately $51 billion in sales for its fiscal 2024 year, which exceeds its previous forecast and slightly surpasses the consensus expectation of $50.42 billion. 

Q2 reported net income of $2.12 billion, or $4.42 per share, a decrease from the $3.48 billion, or $8.15 per share, reported in the same period the previous year.

As AVGO’s stock price surged almost 15% in pre-market trading, surpassing the $1,700 mark, retail investors might be worried that it has become way too expensive. However, the chipmaker addressed these concerns and announced a 10-for-1 stock split that will take effect on July 15.

Although stock splits have no intrinsic impact on stock value, this move is considered cosmetic and investor-attracting, potentially attracting more buyers and bolstering growth.

AVGO stock 24-hour price chart. Source: Google Finance
AVGO stock 24-hour price chart. Source: Google Finance

Analysts are bullish on AVGO stock

Strong performance and, more importantly, strong guidance haven’t gone unnoticed by the analysts on Wall Street, as the Q2 report left a lasting impression reflected in the readjusted price targets for AVGO stock.

Tom O’Malley from Barclays revised the price target for AVGO stock amid the strong performance expected to continue in the upcoming quarter and into the year. The banking firm assigns a ‘buy’ rating while raising the price target from $1,500 to $2,000.

Bernstein’s expert Stacy Rasgon commended Broadcom on de-risking its core business while benefiting from strong margins and an attractive valuation. Rasgon assigned the chipmaker stock an ‘outperform’ ranking and a $1,950 price target.

In a report released on June 12, Matt Ramsay from TD Cowen reiterated a ‘buy’ rating on Broadcom, with a stock price target of $1,750. 

Investment analysts at Rosenblatt Securities restated their ‘buy’ rating on Broadcom’s stock in a research report issued to clients and investors on June 12. They currently have a $1,500 target price on the semiconductor manufacturer’s stock.

The key for analysts in this earnings season seems to be the guidance, and the further it goes, the better, which is why Broadcom impressed them as a company, as it continues to revise its guidance conservatively while continuing to post earnings that beat expectations.

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