Broadcom Ltd. (AVGO) is the New 'A' in 'FANG' - Nomura
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Nomura Securities analyst Romit Shah , reiterated his Buy rating on shares of Broadcom Limited (NASDAQ: AVGO) and noted that consensus estimates have been steadily increasing, up over 15% over the last twelve months to $13.19 for CY17. The analyst expects this trend to continue as research points to accelerating wireless growth, lower operating expenses (% of sales), and lower interest expense.
Shah proclaims, Broadcom is the new "A" in "FANG".
The analyst stated "We expect Broadcom to continue to make solid progress toward its target operating model of 42-43% through merger synergies. We are forecasting stable gross margin at 60% and for expenses to declines 120 bps to 20.4% of sales, resulting in operating margin of ~40% in the October period. In addition, weighted average interest rate will decline this quarter from slightly below 4% to slightly below 3% at current LIBOR rates. This should generate an incremental $25m or $0.06/share per quarter in cash interest expense savings".
No change to the price target of $200.00
Shares of Broadcom Limited closed at $170.12 yesterday.
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