Broadcom (AVGO) is expected to post double-digit growth in sales in fiscal years 2024 and 2025, giving the company earnings power in the $70 to $75 per share range in the long term, BofA Securities said in a report Friday.
The brokerage reiterated its buy rating on the stock as it raised its price target to $1,680 from $1,500, after the company maintained its revenue guidance of around $50 billion for fiscal 2024.
BofA expects fiscal 2024 EPS at $46.70, little changed from its previous estimate of $46.72, but it raised its fiscal 2025 EPS estimate to $57.82 from $56.37.
“We believe 1H could mark the trough for AVGO’s non-AI semi sales, with semi sales accelerating to double digit growth exiting Q4 and into FY25,” BofA said. “Meanwhile, we think AI sales could secularly grow at a 20-25% [compound annual growth rate] with more contribution from high-speed switches.”
BofA said VMWare, which Broadband acquired last year, “is also off to a strong start, with overall AVGO software bookings to nearly double QoQ to $3 billion in Q2 and with VMWare sales expected to grow 10% QoQ every quarter.”
“We see Meta as an important additional [Application-specific Integrated Circuits] customer for AVGO, in addition to existing strong position at Google,” it said.