Raymond James Assumes Broadcom Limited (AVGO) at Outperform

Raymond James analyst Simon Leopold assumes coverage on Broadcom Limited (NASDAQ: AVGO) with a Outperform rating and a price target of $420.00.

The analyst comments "We resume coverage of Broadcom Inc. (AVGO) with an Outperform rating. The company is a share gainer in the AI complex, providing operators customized alternatives to general purpose processors. We expect continued upward estimate revisions, which supports our positive rating. NonAI semis and software actually restrain overall growth, but we expect improvement from the non-AI semis, and believe the margin and cash generation from software is not fully appreciated. Broadcom’s strength in chiplet and systems solutions, coupled with strong networking IP (processing, PHY/Serdes, Optics, CPO) and steady march of advanced packaging/CPO, is a competitive moat to protect shareholder profitability and market share in a rapidly evolving world. Our $420 price target is based on 30x our FY27E EPS. Broadcom Inc. is a global technology leader in semiconductors and infrastructure software, providing mission-critical solutions that enable the world’s most advanced cloud, data center, and enterprise networks. The company’s product portfolio spans custom AI accelerators (XPUs), highspeed networking silicon, optical interconnects, wireless and broadband chips, as well as VMware’s private and hybrid cloud software platform. Broadcom’s combination of technology leadership and disciplined financial management underpins its diversified, high-margin growth model. For FY24, Broadcom generated $51.6B in revenue and over $31B in adjusted EBITDA, reflecting a non-GAAP gross margin of 76.5%; we estimate Google’s TPU contributed ~$8B to sales, while Meta’s MTIA was ~$475M. The company continues to invest in R&D (non-GAAP $5.8B, 11% of FY24) and operates through two segments: Semiconductor Solutions (~60% of sales) and Infrastructure Software (~40%)."

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Shares of Broadcom Limited closed at $354.42 yesterday.

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