Piper Sandler Reaffirms Overweight on Broadcom, $250 Price Target

Piper Sandler analyst Harsh Kumar reiterated an Overweight rating and $250 price target on Broadcom Limited (NASDAQ: AVGO).

“A Deal For Intel Products Could Be Lucrative; Given recent media speculation, we did a deep dive into the possibility of AVGO acquiring Intel’s (not covered) x86 products business (CCG + DCAI) and frankly found potential for it to be extremely lucrative.

Assuming that AVGO management pays a premium to the current market cap and is able to turn this business around just as it has almost every other business that it has previously acquired, we think the numbers become extremely compelling.

Overall, we arrived at a possible annual operating income of roughly $15 billion for the combined two key INTC segments which comprise predominantly client and servers.

We ultimately arrived at a potential sale price of roughly $101 billion and a Debt/EBITDA ratio of ~3.47x for the combined company, which is very palatable in the world of semis, in our view.

This would also add roughly ~$1.50-$1.60 in EPS to AVGO. We reiterate our Overweight rating.”

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