Broadcom Limited (AVGO) Management Meeting Highlights VMWare Plan - Oppenheimer
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Oppenheimer analyst Rick Schafer reiterated an Outperform rating and $700.00 price target on Broadcom Limited (NASDAQ: AVGO) after hosting a management meeting with CEO Hock Tan, CFO Kirsten Spears, and IR Director Ji Yoo where the tone was bullish and laid out a strategy/vision on the $61B deal for VMware.
The analyst stated "VMW's mission-critical vSphere is ubiquitous (>300,000 customers) and comes with a full ecosystem, fitting the profile of a franchise asset. vSphere platform market share tops 95%. Deal is expected to close in FY23 following regulatory approvals. Post-close, AVGO will utilize a proven playbook to 1) focus on core products/customers and 2) reduce non-core costs/improve profitability. We expect divesitures to play a role in cost-reduction efforts as mgmt streamlines to focus on 1,500 strategic accounts. We believe Carbon Black (Security) and Tanzu (DevOps) are potential "for sale" assets. AVGO believes it can increase $4.7B EBITDA (~36%) today to $8.5B (65%). This target is 500bp below CA/SYMC’s 70% margin given the need to support VMW’s large, long-tailed customer base."
Shares of Broadcom Limited closed at $520.17 yesterday.
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