Shares of Broadcom (AVGO 4.11%) were up 6.1% as of 3 p.m. ET Friday following a bullish analyst note from Goldman Sachs on the semiconductor products company.
NASDAQ: AVGO
Key Data Points
Why Goldman Sachs expects Broadcom to outperform
In a note to clients this morning, Goldman analyst Toshiya Hari reinstated coverage on Broadcom with a buy rating and a 12-month price target of $1,325 -- a 16% premium from yesterday's close.
To justify his bullishness, Hari pointed to double-digit percent growth in Broadcom's products related to generative artificial intelligence (AI), including high-speed networking and custom compute solutions. Hari also argued that Broadcom is poised to benefit from a cyclical recovery in its core semiconductor segment as enterprise spending rises in the coming quarters. Finally, he suggested that Broadcom has yet to realize significant operating leverage and synergies following its acquisition of VMware, which closed in November 2023.
What's next for Broadcom investors?
Assuming the timing of Broadcom's past releases are any indication, investors can expect Broadcom to announce its fiscal first-quarter 2024 results in early March. Broadcom hasn't provided specific quarterly guidance, but its full fiscal-year 2024 outlook calls for revenue of roughly $50 billion -- up roughly 39.5% year over year including contributions from acquisitions -- with adjusted EBITDA margin of roughly 60% of revenue.
Whether Broadcom adjusts that outlook based on recent business trends remains to be seen. But given this strong vote of confidence from Wall Street in the meantime, it's no surprise to see shares rallying now.
