Stock Traders Buy High Volume of Call Options on Broadcom (NASDAQ:AVGO)

Key Points

• Unusual options activity: Traders bought 363,397 Broadcom call options on Wednesday, about 14% above the average volume, suggesting heightened bullish interest in the stock.
• Shares rallied: Broadcom stock rose 5.8% to $392.14 during midday trading, even as volume remained below its recent average.
• Fundamentals and outlook remain strong: Broadcom recently beat quarterly EPS and revenue estimates, and analysts still have a consensus Moderate Buy rating with an average price target of $493.24.

Broadcom Inc. (NASDAQ:AVGO - Get Free Report) saw some unusual options trading activity on Wednesday. Stock traders purchased 363,397 call options on the company. This is an increase of approximately 14% compared to the average volume of 319,826 call options.

Broadcom Stock Up 5.8%

Broadcom stock traded up $21.36 during midday trading on Wednesday, hitting $392.14. 18,347,242 shares of the company's stock were exchanged, compared to its average volume of 26,388,904. The company has a market cap of $1.87 trillion, a PE ratio of 65.50, a P/E/G ratio of 0.66 and a beta of 1.45. The firm has a 50-day moving average of $405.96 and a two-hundred day moving average of $363.03. 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 has a 12 month low of $269.58 and a 12 month high of $495.00.

Broadcom (NASDAQ:AVGO - Get Free Report) last announced its earnings results on Wednesday, June 3rd. The semiconductor manufacturer reported $2.44 EPS for the quarter, topping analysts' consensus estimates of $2.40 by $0.04. Broadcom had a net margin of 38.85% and a return on equity of 41.61%. The business had revenue of $22.19 billion during the quarter, compared to the consensus estimate of $22.13 billion. During the same period in the previous year, the company posted $1.58 earnings per share. The firm's revenue was up 47.9% on a year-over-year basis. As a group, analysts expect that Broadcom will post 10.24 earnings per share for the current fiscal year.

Broadcom Dividend Announcement

The business also recently declared a quarterly dividend, which was paid on Tuesday, June 30th. Investors of record on Monday, June 22nd were given a dividend of $0.65 per share. This represents a $2.60 annualized dividend and a yield of 0.7%. The ex-dividend date was Monday, June 22nd. Broadcom's dividend payout ratio (DPR) is currently 43.33%.

Insider Buying and Selling at Broadcom

In related news, insider Mark David Brazeal sold 4,825 shares of the stock in a transaction dated Wednesday, June 17th. The shares were sold at an average price of $394.91, for a total value of $1,905,440.75. Following the completion of the transaction, the insider owned 269,989 shares of the company's stock, valued at approximately $106,621,355.99. This trade represents a 1.76% decrease in their position. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through this hyperlink. Also, insider S. Ram Velaga sold 17,260 shares of Broadcom stock in a transaction dated Thursday, April 9th. The stock was sold at an average price of $352.12, for a total value of $6,077,591.20. Following the completion of the transaction, the insider owned 65,932 shares of the company's stock, valued at approximately $23,215,975.84. This represents a 20.75% decrease in their position. The disclosure for this sale is available in the SEC filing. Insiders have sold 36,014 shares of company stock valued at $13,174,907 over the last ninety days. Corporate insiders own 1.90% of the company's stock.

Institutional Investors Weigh In On Broadcom

Several institutional investors and hedge funds have recently added to or reduced their stakes in the stock. Brighton Jones LLC raised its position in Broadcom by 21.8% in the fourth quarter. Brighton Jones LLC now owns 29,683 shares of the semiconductor manufacturer's stock valued at $6,882,000 after purchasing an additional 5,322 shares during the period. Revolve Wealth Partners LLC increased its holdings in Broadcom by 10.4% in the fourth quarter. Revolve Wealth Partners LLC now owns 7,997 shares of the semiconductor manufacturer's stock valued at $1,854,000 after buying an additional 756 shares during the last quarter. United Bank lifted its position in shares of Broadcom by 76.5% during the 1st quarter. United Bank now owns 2,339 shares of the semiconductor manufacturer's stock worth $392,000 after buying an additional 1,014 shares during the last quarter. Sivia Capital Partners LLC raised its position in Broadcom by 10.1% in the 2nd quarter. Sivia Capital Partners LLC now owns 12,693 shares of the semiconductor manufacturer's stock valued at $3,499,000 after purchasing an additional 1,160 shares during the last quarter. Finally, Capital & Planning LLC increased its stake in Broadcom by 10.5% in the 2nd quarter. Capital & Planning LLC now owns 3,983 shares of the semiconductor manufacturer's stock valued at $1,098,000 after buying an additional 378 shares during the period. Hedge funds and other institutional investors own 76.43% of the company's stock.

Wall Street Analysts Forecast Growth

A number of equities analysts have recently commented on the company. Cantor Fitzgerald reiterated an "overweight" rating and issued a $525.00 target price on shares of Broadcom in a report on Thursday, June 4th. Morgan Stanley set a $502.00 price target on Broadcom and gave the stock an "overweight" rating in a research report on Thursday, June 4th. Royal Bank Of Canada lifted their price objective on shares of Broadcom from $360.00 to $400.00 and gave the stock a "sector perform" rating in a research note on Thursday, June 4th. Jefferies Financial Group set a $550.00 price objective on shares of Broadcom and gave the company a "buy" rating in a research report on Thursday, June 4th. Finally, Citigroup restated a "buy" rating on shares of Broadcom in a report on Thursday, June 4th. One equities research analyst has rated the stock with a Strong Buy rating, twenty-eight have given a Buy rating and four have given a Hold rating to the company. Based on data from MarketBeat, the company presently has an average rating of "Moderate Buy" and a consensus price target of $493.24.

Key Stories Impacting Broadcom

Here are the key news stories impacting Broadcom this week:

• Positive Sentiment: Apple’s $30 billion+ commitment gives Broadcom a larger, longer-term customer revenue stream and reinforces demand for its custom silicon and networking products. Reuters: Apple to spend $30 billion in Broadcom chips deal that will see Colorado factory expand
• Positive Sentiment: Investors are increasingly focused on Broadcom’s AI opportunity, with articles highlighting the company’s large addressable market and potential for continued growth in AI infrastructure. AOL: Broadcom’s $200 Billion AI Opportunity Is Drawing New Interest From Investors
• Neutral Sentiment: UBS said Broadcom and other semiconductor names have pulled back from recent highs, which may be creating a more attractive entry point for investors rather than signaling a change in fundamentals. Benzinga: Micron, Broadcom Just Got 25% Cheaper — And Chip Stocks Are 'Far From Bubble Territory', UBS Says
• Neutral Sentiment: Some recent commentary points to technical bounce potential and continued AI-chip demand, though it does not add new business-specific catalysts. CNBC: A breakout in Broadcom may be forming. How to trade it if it materializes
• Negative Sentiment: Despite the Apple deal, some coverage notes Broadcom has been under pressure recently, with one analyst downgrade and earlier concerns about near-term guidance weighing on sentiment. Yahoo Finance: This Analyst Just Downgraded Broadcom Stock. Here's Why

About Broadcom

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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