Oppenheimer Raises Avago Technologies Price Target On The Back Of F4Q Results

Oppenheimer analyst Rick Schafer reiterated an Outperform rating on Avago Technologies (NASDAQ:AVGO) and raised his price target to $120 (from $100), following the company’s fiscal fourth-quarter results, posting sales/EPS of $1.61B/$1.99 that easily bested consensus $1.55B/$1.69 on better demand, margins and lower costs.

Schafer noted, “We believe AVGO has one of the most strategically and financially attractive business models in semiconductors, and four primary investment considerations underpin our positive outlook on the stock. 1) AVGO has a sustained competitive advantage in the secularly growing high-end filter market that is insulated from the long-term threat of mobile RF integration and has best-in-class visibility to ongoing mobile product cycles. We believe the mobile RF industry, and particularly filters, is entering a period of structural and profitable growth. 2) AVGO has a highly diversified, differentiated and “sticky” non-mobile business that gives the company the financial performance characteristics of a more traditional HPA bellwether. 3) AVGO has an efficiently managed manufacturing advantage that maximizes free cash flow and capital allocation/capital returns to shareholders over time. And 4) AVGO is poised to see substantial EPS and FCF accretion from the LSI transaction. We see sustained top-line growth from an industry technology leader and earnings leverage in the model with a highly efficient capital management strategy. We’d be buyers here.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Rick Schafer has a total average return of 17.0% and a 78.7% success rate. Schafer has a 3.1% average return when recommending AVGO, and is ranked #206 out of 3395 analysts.

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