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On Thursday, Cantor Fitzgerald analyst C.J. Muse adjusted the price target for Broadcom Limited (NASDAQ: NASDAQ:AVGO) stock, reducing it from $300 to $250 while maintaining an Overweight rating on the company's shares. Muse's commentary followed a recent investor call with Broadcom's top executives, including CEO Hock Tan, CFO Kirsten Spears, and Investor Relations representative Ji Yoo. According to InvestingPro data, the stock has delivered an impressive 41.73% return over the past year, despite recent market volatility.
Despite ongoing macroeconomic uncertainties such as tariffs and market volatility, Broadcom's business outlook remains steady, according to the analyst. The company continues to experience strong demand for AI, which is deemed essential for hyperscale computing providers. Additionally, the non-AI semiconductor business appears to have reached a low point, and the software segment is showing stability. This positive outlook is supported by Broadcom's strong fundamentals, including a 76.26% gross profit margin and substantial revenue growth of 40.3% in the last twelve months.Want deeper insights into Broadcom's AI potential? InvestingPro subscribers get access to 15+ exclusive ProTips and comprehensive financial metrics that help evaluate the company's growth trajectory.
Broadcom's diversified nature and significant pricing power are expected to help mitigate potential negative effects from tariffs. Muse anticipates that the company's earnings per share (EPS) estimates will be more resilient than those of other semiconductor companies if market volatility continues.
Earlier in the week, Broadcom management signaled confidence in the company's value by announcing a $10 billion stock buyback program, which they were reportedly able to capitalize on. Despite the reduction in the price target to $250, Muse's valuation is based on approximately 27 times the projected stretch calendar year 2026 EPS of around $9, suggesting a 35% upside from the stock's closing price on the day of the announcement. Current InvestingPro analysis indicates the stock is trading at premium multiples, with a P/E ratio of 81.54x and an EV/EBITDA of 27.42x. The company has also maintained its position as a reliable dividend payer, having raised dividends for 15 consecutive years.
Broadcom remains a top pick for Cantor Fitzgerald, with the firm's analysts seeing the current market volatility as a reason to apply a lower multiple to their price target. The Overweight rating indicates that they continue to view Broadcom's stock favorably relative to the broader market. For a complete analysis of Broadcom's valuation and growth prospects, including exclusive Fair Value estimates and detailed financial health scores, check out the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Broadcom Inc. has announced a $10 billion share buyback program, which will be active until December 31, 2025. This initiative underscores the Board's confidence in the company's financial health and its diversified portfolio in semiconductor and infrastructure software. Broadcom's CEO, Hock Tan, highlighted the company's strategic role in mission-critical infrastructure and generative AI advancements. Kirsten Spears, Broadcom's CFO, emphasized the company's strong cash flow generation capabilities, which support the buyback as a means to deliver value to shareholders. Analysts like Jordan Klein from Mizuho (NYSE:MFG) Securities view the buyback as a positive signal, although he noted that a larger buyback could have been feasible. The buyback plan comes amidst a challenging period for Broadcom, with the semiconductor industry facing trade tensions and supply chain disruptions. Additionally, Cantor Fitzgerald has noted geopolitical challenges impacting the semiconductor sector, including tariffs and AI technology diffusion rules. These developments reflect Broadcom's proactive measures to bolster shareholder value while navigating a complex global market environment.
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