Broadcom Corporation (NASDAQ:AVGO)’s recently closed acquisition of virtualization software firm VMWare offers mid-to-high-single digit percent earnings per share (EPS) accretion, according to Bank of America analysts.
In an update to clients, the analysts raised their price objective on Broadcom stock to $1200 per share from $1050, while reiterating a 'Buy’ rating, noting that VMWare can help Broadcom reduce business cyclicality and expand product offerings to key enterprise customers.
"We view any stock volatility on the VMWare close as an enhanced buying opportunity for a best-in-class computing vendor at a compelling valuation," the analysts wrote.
They added that artificial intelligence (AI) remains at the forefront, though, as Broadcom is still on track to generate an estimated $8 billion plus from AI markets in full year 2024, up from $4 billion in 2023, as the company's strongest, most attractive opportunity remains in generative AI and custom silicon.
Shares of Broadcom eased 1% to $940.50 in late-afternoon trading on Tuesday but have gained 70% year to date.
Contact Sean at sean@proactiveinvestors.com