CFRA Maintains Buy Opinion On Shares Of Broadcom Inc.

CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:

We up our 12-month target to $1,500 from $1,100 on a higher revised P/E of 26.4x our CY 25 EPS view, above historical given increasing exposure to recurring software and EPS upside. We keep our FY 24 (Oct.) EPS at $49.16 and FY 25’s at $56.90. Ahead of Jan-Q results set for March 7 after the close, we see upside to Jan-Q and FY 24 margin/revenue expectations. On the semi side, we see greater AI contribution following commentary from peers/customers, on higher Ethernet and custom AI demand (20% of semi sales in Oct-Q). We like VMware prospects (60% of software sales), as we think it will allow software growth to accelerate in the coming quarters/years, with it focusing on growing VMware Cloud Foundation and becoming mostly subscription-based by year-end. Execution from Hock Tan will also be closely monitored, as we expect cost synergies to track ahead of schedule (VMware opex to be down 40% by year-end) and drive upside to margins (65% adj. EBITDA exiting FY 24)/FCF ($30B in FY 24 and $34B in FY 25).

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