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Avago (AVGO)/Broadcom Deal is Closed, Adjusting Estimates - Sterne Agee CRT

February 2, 2016 7:33 AM EST
Get Alerts AVGO Hot Sheet
Price: $1,237.24 +0.14%

Rating Summary:
    42 Buy, 4 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 8 | Down: 2 | New: 35
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Sterne Agee CRT analyst, Douglas Freedman, views Avago Technologies (NASDAQ: AVGO) completion of BRCM deal as incrementally positive despite near-term consumer headwinds from iPhone and Galaxy weakness. He goes ahead to note that $500 million in synergies has the potential to come out of the model and increase EPS but is not reflected in current projections.

AVGO completed its acquisition of BRCM and the combined company now begins to trade as Broadcom Limited with the ticker still AVGO. On Friday, Jan. 29, 2016, preliminary election results from BRCM shareholders were announced and indicated over-subscription for cash consideration. As a result, final consideration to be received by the holders preferring cash is expected to be prorated to the terms set in the agreement and new AVGO shares to be issued in AprQ are estimated to be ~135M as opposed to 140M in the merger announcement back in May 2015.

F16 and F17 EPS ests are now $9.50 and $12.23, versus previous $9.51 and $12.12, on the adjustment on share count and interest payment. Up to $500M/Y of revenues could be divested in the future but remains in the model at this time.

The company is currently Buy rated with a $180 PT based 14x free cash flow of $12.81 in calendar 2017.

For an analyst ratings summary and ratings history on Avago Technologies click here. For more ratings news on Avago Technologies click here.

Shares of Avago Technologies closed at $137.68 yesterday.



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