Wolfe Research Reiterates Peer Perform on Broadcom

Wolfe Research analyst Chris Caso reiterated a Peerperform rating on Broadcom Limited (NASDAQ: AVGO).

“Maintain Peer Perform rating.

AVGO reported a modest beat on report and guidance, with AI silicon growth and improving conditions in some cyclical segments most impactful for the company’s FY25 outlook.

In particular, AVGO TPU revenue is likely to ramp strongly in 2H FY25. The stock is trading at ~26x our revised $7.82 FY26 EPS (AH), about an 8 turn premium to AVGO’s historic multiple.

While we think the AI business (~28% of FY25 revenue) deserves a premium, the remainder of AVGO’s business remains the same slow growth, high cash flow business that’s always been AVGO’s business model, and that in the past has driven a lower multiple.

Given that multiple, we feel there are more concentrated ways to participate in AI growth with similar valuation. Stock performance.

AVGO has been up strongly over the past year, increasing +33% vs. NVDA’s +25% and MRVL’s 11% decline.

This compares to the S&P 500’s 12% increase and the SOX’s 10% decrease over the same period.”

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