Sunday, April 3, 2016

Seeking Alpha: Excellence Rewarded With Avago

I've been pretty bullish on both Avago and Broadcom (NASDAQ:AVGO) over the years and now that the merger is completed, nothing about this combination has really changed my mind. If anything, watching Avago's management more closely has led me to a greater appreciation of how they see the semiconductor world differently than most and how that informs their management choices. At an overly simplified level, this isn't a company that believes that success will come from pursuing growth for its own sake, but rather that strong margins generated by businesses with meaningful competitive advantages is the real key.

I continue to believe that fair value for the new Broadcom is in the neighborhood of $170, but that there could be some upside to the long-term underlying growth rate of around 5%. As a diversified chip company with tremendous scale and 40%-plus market share in multiple markets, I think Broadcom can still be thought of as a core tech holding, but it may be better to try to add shares when the enthusiasm cools a bit.

Continue here:
Excellence Rewarded With Avago

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