Susquehanna Raise PT on Avago Tech (AVGO); Says Story Doesn't Change Post Q4
Susquehanna reiterated a Positive rating on Avago Technologies (NASDAQ: AVGO), and raised the price target to $165.00 (from $160.00), following the company's 4Q earnings report. Given better margins and continued opex control, the BRCM acquisition on track, and expected gains in wireless as they add capacity in 2016, Susquehanna doesn't think that the story changes at all following the report.
Analyst ChrisCaso commented, "AVGO posted a report that included some of the near-term revenue weakness we had anticipated, and revenue guidance was slightly below expectations. But given better margins and continued opex control, the BRCM acquisition on track, and expected gains in wireless as they add capacity in 2016, we don’t think the story changes at all following the report. Our F16 revenue assumption remains unchanged (though we were below consensus coming into the call). Importantly, we continue to believe the combined company has in excess of $12 in earnings power (including stock comp) once merger synergies are fully realized, which we believe presents a compelling valuation. When we initiated with a Positive rating earlier this week, we did so with the anticipation that we would wish to own the stock no matter where numbers went short term – following this report, we maintain that view."
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Shares of Avago Technologies closed at $132.21 yesterday.