Avago (AVGO) Sees Continued Strong Execution, Canaccord Genuity Says; PT Up to $179
Canaccord Genuity reiterated a Buy rating on Avago Technologies (NASDAQ: AVGO), and raised the price target to $179.00 (from $165.00), following the company's 4Q earnings report. Avago reported pro forma EPS of $2.51, above consensus' $2.38 estimate. The beat was driven by a strong pro forma gross margin of 62.0%.
Also, Management remains committed to the Broadcom acquisition, and Canaccord anticipates a strong execution in meeting to achieving synergy targets given the strong track record in integrating acquisitions.
Analyst Michael Walkley commented, "Avago reported solid Q4/F15 results above our estimates and issued Q1/F16 guidance better than feared given investor concerns regarding slower smartphone trends and potential order reductions from leading customer Apple. Further, management remains committed to the Broadcom acquisition and we anticipate strong execution in meeting to achieving synergy targets given the strong track record in integrating acquisitions. We believe the acquisition significantly expands Avago’s TAM and creates a leading global diversified semiconductor company with a broad portfolio of category-leading products and a leading customer base addressing the wireless and wired infrastructure, enterprise & data center networking and storage, IP traffic routing, Home/IoT and Industrial verticals. This acquisition is consistent with our thesis Avago’s proprietary technologies, strong IP, and diverse customer base in several growth markets position the company for solid long-term sales and earnings growth with industry-leading margins. We reiterate our BUY rating and increase our price target to $179 based on our newly-introduced F2017 estimates."
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Shares of Avago Technologies closed at $132.21 yesterday.