Sunday, April 1, 2018

Broadcom Not Exactly Back To Square One

The market hasn’t been too accommodating to Broadcom (NASDAQ:AVGO) of late. Once a darling (and still well-regarded by many analysts and investors), the shares have been underperforming on a host of issues including worries about the company’s M&A policies (and its reliance on M&A), competitor actions, and the overall health of the semiconductor space.

I really have no operational concerns about Broadcom, and I think the company’s well-balanced mix will generate above-average growth in both the short term and long term. The prospect for value-adding M&A is more uncertain, though returning cash to shareholders is not a bad back-up plan. Based on mid-to-high single-digit long-term growth potential and margins in the 40%’s, I believe Broadcom shares are meaningfully undervalued now, but it will likely take some time for the dust to settle and for investors to move past worries about limitations on future M&A.

Read the full article here:
Broadcom Not Exactly Back To Square One

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