There's been a lot of chatter regarding semiconductor stocks of late, and one such name to keep an eye on is Broadcom Inc (NASDAQ:AVGO). Thanks to long-term support from the 180-day moving average catching multiple pullbacks, Broadcom stock was able to nab an all-time high of $677 in late December. An early-March, post-earnings bull note also helped the stock recover from a late-January dip toward the $515 region, and in the last 12 months the shares have moved 33% higher. Investors may want to temper their expectations, however, as April has been a historically bearish month for the stock, performance wise.
In fact, the equity just showed up on Schaeffer's Senior Quantitative Analyst Rocky White's list of 25 S&P 500 stocks with the worst returns in April. According to this data, AVGO has ended the month lower seven times over the past 10 years, averaging a drop of 2.1%. A similar move from Broadcom stock's current level of trading at $633.73 would put the equity at the $620 mark.
An unwinding of optimism in the options pits could also provide headwinds for AVGO. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day call/put volume ratio of 1.26 sits higher than 75% of readings from the past year. This indicates long calls have been picked up at much faster-than-usual clip over the last 10 weeks.
For those still looking to play Broadcom stock's next move, options look like the way to go. The equity's Schaeffer's Volatility Index (SVI) of 27% stands higher than only 20% of readings from the past 12 months, implying option players have rarely priced in lower volatility expectations.
Moving on to analyst sentiment, there's room for the brokerage bunch to shift its tune as well. In fact, 18 of the 22 analysts covering AVGO sport a "buy" or better, versus four at a tepid "hold." Plus, the 12-month consensus price target of $685.32 is an 8.2% premium to current levels. All of this leaves the equity vulnerable to a round of downgrades and/or price-target cuts in the near future.
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