Analysts at UBS and BofA raised their price targets for Broadcom (NASDAQ:AVGO) in research notes on Tuesday.
BofA's analysts lifted their firm's price target for the stock to $1,200 from $1,050 per share, reiterating a Buy rating on the stock.
The analysts said the price target increase follows the closure of the acquisition of virtualization software firm VMware (NYSE:US90275F1966=UBSS) last week. "Our first take estimate is around 2.3% and 7.3% pf-EPS accretion in FY24/25E, with upside to 10%+ accretion and $60+ in pf-EPS power for AVGO in CY25E if it's able to realize planned synergies and/or delever faster than assumed," they wrote.
They added that AVGO’s "strongest, most attractive opportunity" remains in genAI and custom silicon, and they anticipate AI driving $8 billion in sales
in FY24E. In addition, the firm views any stock volatility on the VMW close as an "enhanced buying opportunity" for a "best-in-class computing vendor" at a compelling valuation.
At UBS, analysts raised the price target for AVGO to $1,125 from $925 per share, maintaining a Buy rating on the stock.
The analysts said they are updating their estimates following the VMWare completion and they believe the deal is "~10% accretive to C2024 EPS and ~17% accretive to C2025."
"Given the significant appreciation in the stock since the deal was announced, the deal is costing ~$20B more than at the time of announcement, but the deal structure preserved the accretion," wrote the analysts. "Based on our pro forma analysis, we expect FCF for the combined entity to increase by 29% and 34% for the years 2024 and 2025 vs. our prior standalone AVGO estimates, which will allow AVGO to push its dividend significantly higher."