On Friday, Truist Securities adjusted its outlook on Broadcom Limited (NASDAQ:AVGO), increasing the price target to $1,566.00, up from the previous $1,240.00, while reaffirming a Buy rating on the stock. The adjustment follows Broadcom's recent financial performance, which surpassed consensus estimates for Q4 (January) and confirmed the guidance for fiscal year 2024.
The semiconductor company's increased exposure to artificial intelligence (AI) was highlighted as a key driver for the raised price target. The analyst noted that the growth in AI significantly countered the lower results from other semiconductor areas, particularly storage and broadband, which are experiencing a cyclical downturn.
Despite the weaker performance in storage and broadband, the addition of a new AI accelerator customer and an increase in revenue has led to a more optimistic outlook for Broadcom. The expectation is for high single-digit organic sales growth and low double-digit growth in free cash flow, earnings per share (EPS), and dividends per share (DPS).
The financial forecast for Broadcom has also been revised upward, with the calendar year 2025 EPS now projected to reach $65.27, a rise from the earlier estimate of $59.05. The new price target is based on a valuation of 24 times the earnings, which represents a 5 times premium to the S&P 500, reflecting the firm's confidence in Broadcom's growth prospects driven by its AI business, dividend strategy, and potential mergers and acquisitions benefits.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.