Broadcom Inc. (NASDAQ: AVGO) experienced a decline of 1.8% in its share price during mid-day trading on Friday. The stock, which reached a low of $324.69, was last seen at $325.17. Trading volume stood at 18,187,485 shares, a significant drop of 31% from the average session volume of 26,497,113 shares. The previous closing price was $331.17.
Key Developments Surrounding Broadcom
Several crucial factors influenced Broadcom’s stock performance this week. Notably, Cathie Wood’s ARK Investment filed for a substantial purchase of approximately 87,148 shares, indicating strong institutional confidence in Broadcom’s potential within the AI infrastructure sector. Additionally, Mirova US LLC significantly boosted its stake by 589,713 shares, further contributing to positive demand-side dynamics.
Broadcom also introduced a new Wi-Fi 8 enterprise platform, designed to cater to AI edge computing and enterprise networking needs. This launch may enhance the total addressable market (TAM) for Broadcom’s networking chips. Analysts are optimistic, with some predicting a potential price target of $450, contingent on sustained demand from major players in the tech industry, including Google and Meta.
Nevertheless, there are mixed sentiments regarding the stock. DA Davidson initiated coverage with a Neutral rating, suggesting that some analysts foresee limited near-term upside despite the favorable AI backdrop. Concerns have also emerged regarding the valuation surrounding the Wi-Fi 8 launch, with speculation that Broadcom’s premium pricing may already reflect anticipated growth from AI developments.
Analyst Insights and Market Reactions
Market analysts have offered varied perspectives on Broadcom’s stock. Citigroup reaffirmed a Buy rating on January 15, while Robert W. Baird set a price target of $420.00. Oppenheimer raised its price objective from $435.00 to $450.00, designating the stock as an Outperform. Conversely, Wall Street Zen upgraded Broadcom from a Hold to a Buy rating.
Currently, consensus ratings show that two analysts have given the stock a Strong Buy rating, thirty have rated it as Buy, and two maintain a Hold rating. According to data from MarketBeat, Broadcom has an average rating of Buy with a consensus target price of $433.87.
The company also holds a debt-to-equity ratio of 0.76, a current ratio of 1.71, and a quick ratio of 1.58. Broadcom’s market capitalization is approximately $1.54 trillion, with a price-to-earnings ratio of 68.31.
In its latest quarterly earnings report, released on December 11, 2023, Broadcom reported earnings per share (EPS) of $1.95, surpassing the consensus estimate of $1.87 by $0.08. The firm achieved revenue of $18.02 billion, exceeding expectations of $17.46 billion and reflecting a 28.2% increase compared to the same quarter the previous year.
Broadcom recently announced an increase in its quarterly dividend, which was paid on December 31, 2023. Shareholders of record on December 22 received a dividend of $0.65, up from the previous $0.59. This translates to an annualized dividend of $2.60 and a yield of 0.8%, with a payout ratio of 54.62%.
In terms of insider activity, Chief Financial Officer Kirsten M. Spears sold 30,000 shares at an average price of $347.82, totaling approximately $10.43 million. Similarly, Chief Executive Officer Hock E. Tan sold 130,000 shares for around $42.38 million. Collectively, insiders sold 779,101 shares valued at $283.80 million over the last quarter.
Institutional investors have also adjusted their holdings in Broadcom. Arete Wealth Advisors LLC increased its stake by 5.0%, while Jacobi Capital Management LLC raised its holdings by 3.1%. Meanwhile, some large investors, including PRIMECAP Management Co, have reduced their positions, creating localized selling pressure.
Broadcom Inc., headquartered in Irvine, California, is a leading global technology company specializing in semiconductor and infrastructure software solutions across various markets. Its offerings include components for wired and wireless communications, enterprise and cloud storage, and networking solutions, serving a diverse clientele worldwide.
