Seeking Alpha: Avago Definitely Getting Some Benefit Of The Doubt

A little more than a year ago, I wrote about Avago Technologies (AVGO) and liked the prospects for the stock based both on its strong position in FBAR filters (an important component for handsets) and its under-appreciated positions in areas like fiber optic transceivers, SerDes ASICs, industrial fiber optics, and motion encoders for markets like networking, automation, and so on. In the 14 months since that piece, the shares have risen more than 110%.

I'm not quite as bullish on Avago now, though. I have a positive opinion of the LSI acquisition on balance, but I feel like sentiment has improved at a much greater rate than the long-term business prospects. While I do think Avago can exceed its own targets for reaping benefits from the LSI deal, it would appear that management pretty much has to if the stock is going to remain strong. I do like the newly-diversified Avago's business mix a little more and I think the company can do big things in both wireless and networking, but I think it takes some pretty ambitious assumptions to drive a significantly higher value estimate.

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Avago Definitely Getting Some Benefit Of The Doubt