Broadcom (NASDAQ:AVGO) received a rating upgrade to Buy from Hold yesterday by Top-rated analyst Kinngai Chan from Summit Redstone Partners. The upgrade follows Broadcom’s better-than-expected fiscal fourth-quarter results.
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Chan believes Broadcom will exceed its Fiscal 2024 outlook despite a cyclical slowdown in its Broadband and Storage semiconductor business. Additionally, he adds that AVGO is one of the best-managed semiconductor companies under his coverage and that the current stock price already incorporates the anticipated cyclical weakness.
Q4 Earnings Snapshot
Broadcom reported adjusted earnings of $11.06 per share in the fiscal fourth quarter, which handily surpassed the analysts’ expectations of $10.96. Further, the reported figure compares favorably with $10.45 per share in the prior year’s quarter.
Similarly, total revenues climbed 4.1% year-over-year to $9.3 billion and exceeded the consensus estimate of $9.28 billion. Higher revenues across Semiconductor solutions and Infrastructure Software units contributed to Broadcom’s top-line growth.
Fiscal 2024 Outlook
For Fiscal 2024, AVGO is projecting total sales of $50 billion. Revenue from the company’s core business, Semiconductor Solutions, is expected to rise by mid- to high-single-digit percent on a year-over-year basis.
Moreover, Broadcom anticipates that the acquisition of VMware (completed in November 2023) will significantly contribute to the growth of its Infrastructure Software segment. The unit’s revenue is projected to reach $20 billion in Fiscal 2024, compared to $7.64 billion in Fiscal 2023.
What is the Forecast for AVGO Stock?
Wall Street analysts are highly optimistic about Broadcom stock. It has a Strong Buy consensus rating based on 12 Buys and two Holds. The average AVGO price target of $1,044.58 implies a 13.3% upside potential. Shares of the company have gained about 70% so far in 2023.
