On Wednesday, Broadcom Limited (NASDAQ:AVGO) saw its stock price target adjusted by Cantor Fitzgerald to $200 from the previous $2,000, while the firm maintained an Overweight rating on the stock. This revision follows the completion of a 10-for-1 stock split by Broadcom, which became effective on Monday before the market opened.
The adjustment in the price target is a reflection of the new share count post-split. According to the firm, there have been no changes to the Net Income assumptions or the overall investment thesis on Broadcom. The stock split has led to a recalibration of earnings per share (EPS) estimates for the calendar years 2024 and 2025, now set at $5.12 and $6.50 respectively, compared to the previous estimates of $51.04 and $65.00.
The analyst from Cantor Fitzgerald emphasized that the lower price target is solely a result of the increased number of shares due to the stock split and does not indicate a change in the perceived value of the company. The firm's stance on Broadcom remains positive, with expectations for the company's performance to continue on its current trajectory.
Broadcom's stock split was announced in the previous quarter and was implemented to increase the liquidity of the shares and make them more accessible to a broader range of investors. Stock splits are a common financial maneuver used by companies that have seen significant growth in their share price, aiming to make investing in the company more attainable for smaller investors without impacting the underlying market capitalization.
Investors and market watchers will be closely monitoring Broadcom's financial performance in the coming quarters to see how the stock split and the recalibrated price target reflect the company's ongoing market position and growth prospects.
In other recent news, Broadcom Limited has experienced significant developments. The company's earnings report for fiscal year 2024 revealed a revenue forecast increase from $50 billion to $51 billion, driven by robust artificial intelligence (AI) revenue.
Reflecting this, Oppenheimer adjusted its earnings per share (EPS) estimates for the years 2024 to 2026 following Broadcom's recent 10-for-1 stock split. TD Cowen maintained a Buy rating on Broadcom, raising the price target to $210, while Evercore ISI set a new target at $201 post-split, maintaining an Outperform rating.
In addition, Rosenblatt Securities increased its price target for Broadcom, citing strong AI sales growth. These adjustments come in the wake of Broadcom's recent acquisition of VMware (NYSE:VMW), which is expected to contribute to the company's growth.
Notably, Broadcom's second-quarter earnings exceeded expectations, reporting sales of $12.49 billion and an EPS of $10.96. Furthermore, the company's AI-related revenue forecast was raised to over $11 billion for the current year.
InvestingPro Insights
Following the recent stock split by Broadcom Limited (NASDAQ:AVGO), investors are keenly observing how the market is valuing the company. According to InvestingPro data, Broadcom boasts a substantial market capitalization of $788.42 billion, indicating its significant presence in the market.
The company's commitment to shareholder returns is evident, with a notable dividend yield of 1.24% and a history of increasing its dividend for 15 consecutive years, a testament to its financial health and management's confidence in its future cash flows.
Analyzing the company's performance metrics, Broadcom has shown impressive revenue growth of 21.62% over the last twelve months as of Q2 2024, underlining its ability to expand its business in the competitive semiconductor industry. Furthermore, the company's gross profit margin stands at a robust 74.24%, showcasing its efficiency in maintaining profitability while managing costs.
These figures are complemented by InvestingPro Tips, which highlight that analysts are anticipating sales growth in the current year and have revised their earnings upwards for the upcoming period, suggesting a positive outlook for the company's financial trajectory.
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