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Shares of Broadcom (NASDAQ:AVGO) superior over 5% on Monday as Citi resumed protection on the inventory with a Purchase score and a worth goal of $1,100, noting power within the core enterprise and accretion from the VMware acquisition.
The financial institution commented that Broadcom reported sturdy F4Q23 outcomes pushed by AI, “which is anticipated to double from $4.0 billion in F23 to greater than $8.0B in F24”.
The semiconductor and software program firm earned an adjusted $11.06 per share on $9.3B in income within the fourth quarter, in comparison with expectations of $10.96 per share on $9.28B in income.
Throughout the quarterly interval, semiconductor options income got here in at $7.33B, above the $7.27B estimate, up 3% year-over-year.
Citi analysts additional anticipated gross sales from AI infrastructure to double from $4B in F23 (11% of F23 gross sales) to over $8B in F24 (17% in F24 gross sales) with F24 semiconductor gross sales guided up mid-to-high single digit YoY because the AI infrastructure demand offsets the semi downturn.
Commenting on Broadcom’s latest $69B acquisition of VMware (VMW), Citi believed VMware may very well be $12.50 or 34% accretive to AVGO’s F25 EPS.
“We consider Broadcom ought to ultimately obtain gross margins of 78% and working margins of 58% for peak EPS of $60.00,” Citi analysts added.
Because the begin of the yr, AVGO has jumped about 70.61%, outpacing the S&P 500, which rose about 20.40% in the identical interval.