Thursday, June 20, 2019

Broadcom Looks Undervalued After Resetting Expectations

I’ve been cautious on chip stocks in recent months, primarily because I thought the Street was carrying inflated expectations for a strong second half rebound. Although I can’t say Broadcom (AVGO) has totally de-risked its fiscal second half, nor can I say that there’s no further downside for the global economy and/or chip stock revenue expectations, I think expectations are at a much saner level than they were before, with chip stocks having modestly underperformed the overall market.

I believe Broadcom shares should trade above $300. Moreover, I think management has proven itself over the years as one of the most realistic teams in the space with respect to what drives value in semiconductors. With a strong presence in the data center, as well as a host of other opportunities, I continue to believe this is one of the best-run semiconductor companies, and now it’s trading below fair value.

Read more here:
Broadcom Looks Undervalued After Resetting Expectations

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