Broadcom (NASDAQ:AVGO) Shares Gap Down Following Analyst Downgrade

Key Points

• Broadcom shares fell sharply after Truist Financial cut its price target from $550 to $520, opening at $351.74 versus a prior close of $367.24. Truist maintained a Buy rating.
• Broadcom reported strong third-quarter results, with revenue up 86% year over year to $29.6 billion, adjusted EPS of $3.32 beating estimates, and AI semiconductor revenue surging 221% to $16.7 billion.
• Despite the earnings beat and broadly bullish analyst sentiment, shares faced pressure after fourth-quarter revenue guidance of $34.8 billion came in slightly below expectations, while supply constraints and competition added to investor concerns.

Broadcom Inc. (NASDAQ:AVGO - Get Free Report)'s stock price gapped down before the market opened on Thursday after Truist Financial lowered their price target on the stock from $550.00 to $520.00. The stock had previously closed at $367.24, but opened at $351.74. Truist Financial currently has a buy rating on the stock. Broadcom shares last traded at $342.8930, with a volume of 12,627,053 shares trading hands.

A number of other equities research analysts have also recently commented on the stock. Deutsche Bank Aktiengesellschaft reiterated a "buy" rating and set a $515.00 price target (up from $430.00) on shares of Broadcom in a report on Thursday, June 4th. BMO Capital Markets upped their price objective on Broadcom from $455.00 to $575.00 and gave the company an "outperform" rating in a research report on Thursday. The Goldman Sachs Group reissued a "buy" rating on shares of Broadcom in a report on Monday, August 3rd. Jefferies Financial Group assumed coverage on Broadcom in a research note on Thursday. They issued a "buy" rating for the company. Finally, Dbs Bank raised Broadcom to a "moderate buy" rating in a report on Thursday, June 18th. Thirty-one equities research analysts have rated the stock with a Buy rating and four have given a Hold rating to the stock. Based on data from MarketBeat, the stock presently has a consensus rating of "Moderate Buy" and a consensus price target of $501.77.

Insider Buying and Selling at Broadcom

In other Broadcom news, Director Justine Page sold 1,602 shares of the business's stock in a transaction dated Monday, June 29th. The stock was sold at an average price of $373.86, for a total transaction of $598,923.72. Following the completion of the sale, the director owned 17,426 shares of the company's stock, valued at approximately $6,514,884.36. The trade was a 8.42% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which is accessible through the SEC website. Also, insider Mark David Brazeal sold 25,000 shares of the company's stock in a transaction dated Friday, July 10th. The stock was sold at an average price of $401.33, for a total value of $10,033,250.00. Following the completion of the sale, the insider owned 194,989 shares of the company's stock, valued at approximately $78,254,935.37. The trade was a 11.36% decrease in their position. The SEC filing for this sale provides additional information. In the last 90 days, insiders sold 61,644 shares of company stock worth $24,016,214. 1.90% of the stock is currently owned by insiders.

Key Stories Impacting Broadcom

Here are the key news stories impacting Broadcom this week:

• Positive Sentiment: Broadcom reported fiscal third-quarter revenue of approximately $29.6 billion, up 86% year over year, and non-GAAP EPS of $3.32, exceeding the $3.22 consensus estimate. Free cash flow reached $13.7 billion. Broadcom fiscal third-quarter results
• Positive Sentiment: AI semiconductor revenue surged 221% year over year to $16.7 billion, up 54% sequentially. Management also outlined a potential AI semiconductor revenue opportunity of $115 billion in fiscal 2027 and $230 billion in 2028, supported by strong customer demand and bookings. AVGO Q3 earnings call and AI roadmap
• Positive Sentiment: Several firms raised their targets after the report. Cantor Fitzgerald and Rosenblatt lifted targets to $600, BMO to $575, and Macquarie upgraded the shares to Outperform with a $490 target, citing reduced insourcing concerns and strong custom-chip prospects. Analyst target increases
• Neutral Sentiment: Broadcom declared a quarterly dividend of $0.65 per share, payable September 30 to shareholders of record September 21, reinforcing its shareholder-return program. Broadcom dividend announcement
• Negative Sentiment: Fourth-quarter revenue guidance of approximately $34.8 billion came in below estimates near $35.0 billion. Investors viewed the outlook as too conservative relative to AVGO’s premium valuation and elevated AI-growth expectations, making the guidance miss the immediate catalyst for selling. Broadcom quarterly revenue forecast
• Negative Sentiment: Management cited land, power, chip and substrate availability as constraints on data-center deployments. Competition, including Google’s relationship with Marvell, and uncertainty over who will fund increasingly large AI infrastructure projects are also weighing on sentiment. Broadcom CEO on AI supply constraints

Institutional Investors Weigh In On Broadcom

A number of institutional investors and hedge funds have recently added to or reduced their stakes in the company. ROSS JOHNSON & Associates LLC grew its position in shares of Broadcom by 1,320.0% during the fourth quarter. ROSS JOHNSON & Associates LLC now owns 71 shares of the semiconductor manufacturer's stock worth $25,000 after purchasing an additional 66 shares in the last quarter. Networth Advisors LLC grew its holdings in Broadcom by 546.2% during the 1st quarter. Networth Advisors LLC now owns 84 shares of the semiconductor manufacturer's stock valued at $26,000 after buying an additional 71 shares in the last quarter. SWAN Capital LLC raised its position in shares of Broadcom by 261.9% during the fourth quarter. SWAN Capital LLC now owns 76 shares of the semiconductor manufacturer's stock valued at $26,000 after buying an additional 55 shares during the last quarter. Harborfront Financial Group LLC bought a new position in shares of Broadcom during the second quarter worth $38,000. Finally, Cherry Tree Wealth Management LLC grew its stake in Broadcom by 44.9% during the fourth quarter. Cherry Tree Wealth Management LLC now owns 129 shares of the semiconductor manufacturer's stock valued at $45,000 after acquiring an additional 40 shares in the last quarter. Institutional investors own 76.43% of the company's stock.

Broadcom Stock Performance

The business's fifty day simple moving average is $384.15 and its 200-day simple moving average is $377.14. The company has a market capitalization of $1.67 trillion, a P/E ratio of 58.58, a P/E/G ratio of 0.71 and a beta of 1.44. The company has a debt-to-equity ratio of 0.71, a quick ratio of 2.01 and a current ratio of 2.24.

Broadcom (NASDAQ:AVGO - Get Free Report) last issued its earnings results on Wednesday, September 2nd. The semiconductor manufacturer reported $3.32 earnings per share (EPS) for the quarter, topping the consensus estimate of $3.22 by $0.10. Broadcom had a return on equity of 41.61% and a net margin of 38.85%.The firm had revenue of $29.59 billion for the quarter, compared to analysts' expectations of $29.43 billion. During the same period in the previous year, the firm posted $1.69 earnings per share. The business's revenue was up 85.5% compared to the same quarter last year. As a group, equities analysts anticipate that Broadcom Inc. will post 10.24 earnings per share for the current fiscal year.

Broadcom Dividend Announcement

The firm also recently announced a quarterly dividend, which will be paid on Wednesday, September 30th. Investors of record on Monday, September 21st will be issued a $0.65 dividend. The ex-dividend date of this dividend is Monday, September 21st. This represents a $2.60 dividend on an annualized basis and a dividend yield of 0.7%. Broadcom's dividend payout ratio (DPR) is 43.33%.

Broadcom Company Profile

Broadcom Inc NASDAQ: AVGO is a global technology company that designs, develops and supplies semiconductor and infrastructure software solutions for a broad range of markets. The company's semiconductor business provides components and systems for wired and wireless communications, enterprise and cloud storage, networking and broadband access, serving original equipment manufacturers, cloud service providers, telecommunications carriers and industrial customers worldwide. Broadcom is headquartered in Irvine, California, and operates globally with research, development and sales organizations across North America, Europe and Asia.

On the semiconductor side, Broadcom's portfolio includes system-on-chip (SoC) and application-specific integrated circuit (ASIC) solutions, radio-frequency and connectivity components, Ethernet switching and PHY devices, storage adapters and controllers, optical transceivers and other networking silicon.

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