Semiconductor company Broadcom (NASDAQ:AVGO) is mulling strategic decisions for two units of VMware after completing the acquisition last week. A Business Insider report, which had access to a leaked company email, noted the two business units as End-User Computing and Carbon Black (a cybersecurity unit). Broadcom completed the $69 billion acquisition of the cloud computing company on November 22 after gaining China’s antitrust approval.
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The report specified that VMware will continue to operate via four business units – Cloud Foundation, Tanzu, Software-Defined Edge, and Application Networking and Security.
Broadcom Evaluates VMware’s Units
The news also aligns with Broadcom’s recent directions for VMware channel partners of not comingling VMware’s sales with those of the two aforementioned units. Several channel partners are unhappy with the way things are being managed at VMware after the takeover. Channel partners are facing communication challenges with VMware personnel since many have left or let go. They are also complaining of delays in getting deal approvals and pricing uncertainty amid organizational changes.
Broadcom has a history of selling off parts of businesses it acquires after reviewing their importance to the firm. The chip maker also cut VMware’s workforce by an unspecified number after its takeover. While the company is busy shifting gears to successfully integrate VMware into its business, it must do so quickly, before it starts impacting its operations.
What is the Forecast for AVGO Stock?
Analysts are highly optimistic about AVGO stock following its VMware acquisition. On Tuesday, Susquehanna analyst Christopher Rolland raised the price target for AVGO to $1,100 (16.9% upside) from $1,010 while maintaining a Buy rating.
On the same day, UBS analyst Timothy Arcuri increased AVGO’s price target to $1,125 (19.6% upside) from $925 and maintained a Buy rating. Also, Bank of Securities analyst Vivek Arya reiterated a Buy rating on AVGO on Monday and raised the price target to $1,200 (27.6% upside) from $1,050.
Overall, with 17 Buys and two Hold ratings, AVGO has a Strong Buy consensus rating on TipRanks. The average Broadcom price forecast of $1,012.59 implies 7.6% upside potential from current levels. AVGO stock has gained 73.1% so far this year.
