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Broadcom Shares Down 1% With A Strong Positive Trend: Target Raise and Insider Sale

Analyst Team trader
Updated 28 Mar 2024

Broadcom Inc. (NASDAQ:AVGO) shares dropped just under 1% in trading yesterday, but the broader trend in the stock has been quite the success story in recent years.

Broadcom is a leading tech company, and presents an attractive proposition for investors with its remarkable mix of dividend growth and strong underlying fundamentals. The company has demonstrated sensational market performance, outstripping many of its peers with a 111% gain over the last 12 months, 411% over the past five years, and all whilst maintaining a healthy 1.59% dividend yield.

In a competitive backdrop where technology companies are vying for growth, Broadcom has carved out a niche that comes with robust strategies like regular dividend hikes and intelligent M&A activities. Focused on creating shareholder value, the company consistently ups its dividend, with a track record of increasing it over the years. These increments come alongside its astute acquisition manoeuvres, further amplifying its financial clout and market positioning.

Tapping into the lucrative artificial intelligence (AI) space, Broadcom has strategically positioned itself to benefit from the industry's anticipated expansion. As the tenth-largest corporation on the S&P 500 SPY ETF with 1.36% weighting, away from the spotlight, the company's extensive involvement in AI symbolizes a vital growth catalyst, aligning with market sentiment that remains bullish on its prospects.

This bullishness was underscored in the first quarter of Fiscal Year 2024, where Broadcom paced ahead with a 34% increase in its revenue year-over-year—a strong affirmation of CEO Hock Tan's vision to target a monumental $50 billion in revenue for the fiscal year.

Financial agility remains at the core of Broadcom's operational ethos, as it flexed its fiscal muscle by repurchasing 7.7 million shares worth $8.29 billion during the first quarter of fiscal 2024. Moreover, the company's non-GAAP net income rose by a commendable 17.2% year-over-year, signalling a robust profit trajectory.


Broadcom Price Target Raise

Analysts at TD Cohen last week upgraded Broadcom stock to ‘Outperform' and increased their AVGO price target to a very healthy $1500 (from the prior mark of $1400). The upgrade happened in the aftermath of the companies AI infrastructure event and came with some commentary that would please AVGO bulls. In what was a positive research note TD was confident in the company's “sustainability and diversity” of growth and potential upside to consensus estimates, despite the recent run in share prices.

The consensus price target is firmly in green territory, just short of 20% above the current level at $1576. With a high bar at $1720, and a low still at a healthy $1405, the sentiment is very firmly with Broadcom at this time.

Insider Sale News – Through regulatory filings, president of Semi Solutions and Broadcom insider Charlie Kawwas was disclosed on March 25th as having sold 5000 shares of common stock in a total transaction worth $6.72M.

Whilst insider sales have to happen at times due to portfolio rebalances and prudent financial management, it is always something to keep an eye on if the trend is moving particularly strongly in one direction or the other. As it stands, there is not a significant trend in insider activity on AVGO, but it will be something that is noted and watched by markets.

Outside of the recent adjustments, Broadcom's knack for maintaining impressive margins, coupled with its consistent growth and commitment to raising dividends, makes it one to keep a close eye on.

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The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.