Zacks Investment Research Lowers Broadcom (AVGO) to Sell

Broadcom (NASDAQ:AVGO) was downgraded by Zacks Investment Research from a “hold” rating to a “sell” rating in a research note issued on Wednesday.

According to Zacks, “Broadcom faces intensifying competition and integration risks due to frequent acquisitions. The company’s leveraged balance sheet and customer concentration continue to be headwinds. Moreover, estimates have remained stable lately ahead of company’s Q2 earnings release. Furthermore, the company’s stock has underformed the industry in the past year. However, the company has positive record of earnings surprises in recent quarters. The company is benefiting from strong demand of its wireless solutions and expanding product portfolio, which makes it well-positioned to address the needs of rapidly growing technologies like IoT and 5G. Strong ties with leading OEMs across multiple target markets will help the company to gain key insights into the requirements of customers. The launch of the next generation WiFi products is expected to be a growth driver.Re-domiciliation to the USA and aggressive share buyback are other positives.”

Other equities analysts have also issued research reports about the stock. Vetr raised shares of Broadcom from a “hold” rating to a “buy” rating and set a $269.37 target price on the stock in a report on Thursday, January 25th. Deutsche Bank began coverage on shares of Broadcom in a report on Thursday, March 15th. They set a “buy” rating and a $325.00 target price on the stock. UBS began coverage on shares of Broadcom in a report on Wednesday, April 4th. They set a “buy” rating and a $350.00 target price on the stock. DA Davidson reduced their target price on shares of Broadcom to $300.00 and set a “positive” rating on the stock in a report on Thursday, May 10th. Finally, Canaccord Genuity reaffirmed a “buy” rating and set a $340.00 target price (up previously from $325.00) on shares of Broadcom in a report on Friday, March 16th. One investment analyst has rated the stock with a sell rating, four have issued a hold rating, thirty-two have issued a buy rating and one has assigned a strong buy rating to the company. Broadcom presently has an average rating of “Buy” and a consensus price target of $308.96.

Broadcom opened at $239.45 on Wednesday, Marketbeat reports. The company has a debt-to-equity ratio of 0.60, a quick ratio of 5.04 and a current ratio of 5.70. Broadcom has a 52 week low of $239.39 and a 52 week high of $241.50. The firm has a market cap of $98.79 billion, a P/E ratio of 15.11, a price-to-earnings-growth ratio of 1.15 and a beta of 0.95.

Broadcom (NASDAQ:AVGO) last released its earnings results on Thursday, March 15th. The semiconductor manufacturer reported $5.12 EPS for the quarter, beating the Thomson Reuters’ consensus estimate of $4.41 by $0.71. Broadcom had a net margin of 41.37% and a return on equity of 29.50%. The company had revenue of $5.33 billion for the quarter, compared to analyst estimates of $5.32 billion. During the same quarter last year, the firm earned $3.63 EPS. The firm’s quarterly revenue was up 28.5% compared to the same quarter last year. research analysts expect that Broadcom will post 16.82 earnings per share for the current year.

Broadcom announced that its board has approved a stock buyback program on Thursday, April 12th that authorizes the company to repurchase $12.00 billion in shares. This repurchase authorization authorizes the semiconductor manufacturer to purchase up to 12.2% of its shares through open market purchases. Shares repurchase programs are generally an indication that the company’s management believes its stock is undervalued.

In related news, insider Hock E. Tan sold 20,000 shares of Broadcom stock in a transaction dated Monday, April 16th. The shares were sold at an average price of $248.03, for a total transaction of $4,960,600.00. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available through the SEC website. Also, insider Kirsten M. Spears sold 199 shares of Broadcom stock in a transaction dated Friday, March 2nd. The shares were sold at an average price of $243.88, for a total transaction of $48,532.12. The disclosure for this sale can be found here. Over the last ninety days, insiders sold 78,675 shares of company stock valued at $20,078,429. Corporate insiders own 3.30% of the company’s stock.

A number of hedge funds and other institutional investors have recently modified their holdings of AVGO. Buckingham Capital Management Inc. lifted its position in Broadcom by 63.5% during the 3rd quarter. Buckingham Capital Management Inc. now owns 2,346 shares of the semiconductor manufacturer’s stock valued at $569,000 after acquiring an additional 911 shares during the period. Atria Investments LLC lifted its position in Broadcom by 8.8% during the 4th quarter. Atria Investments LLC now owns 6,190 shares of the semiconductor manufacturer’s stock valued at $1,590,000 after acquiring an additional 499 shares during the period. E&G Advisors LP purchased a new position in Broadcom during the 4th quarter valued at about $501,000. Asset Dedication LLC lifted its position in Broadcom by 63.2% during the 4th quarter. Asset Dedication LLC now owns 2,206 shares of the semiconductor manufacturer’s stock valued at $565,000 after acquiring an additional 854 shares during the period. Finally, Bach Investment Advisors Ltd purchased a new position in Broadcom during the 4th quarter valued at about $259,000. 89.02% of the stock is owned by institutional investors.

About Broadcom

Broadcom Limited designs, develops, and supplies a range of semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide. The company operates through four segments: Wired Infrastructure, Wireless Communications, Enterprise Storage, and Industrial & Other.

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