Cowen Lifts PT on Broadcom (AVGO) to $200; Says Company Firing on All Cylinders
Cowen and Company lifts its price target on Outperform-rated Broadcom (Nasdaq: AVGO) from $190 to $200 folllowing solid Q2 results and outlook issued Thursday night.
Analyst Tim Arcuri commented today,
AVGO has been our top pick since our recent initiation and today's call reinforced and validated our conviction.
The company is being very strategic in divesting businesses that do not fit its model while paying down debt early to prepare for its next M&A opportunity. AVGO beat and guided above the Street as it saw signs of strong demand coming from wireless in particular as AAPL starts the iPhone 7 ramp in Q3 and painted a strong picture for wired networking demand more than offsetting storage weakness. Q3 wireless was guided up mid 20's % representing stronger than expected content gains, although off well known Q2 weakness. Q3 wireless is back end loaded with most of the revs recognized in the month of July, while Q4 usually has the greatest sequential increase which we believe will be the case.
Meanwhile a multi year supply agreement gives longer term visibility to the top customer. The wired networking segment continues to perform on strong switching and routing data center demand while Tomahawk and Jericho ramp ups set up the business well for next year with the coming 100G wave.