Goldman Sachs Raises Price Target on Avago; Boosts Outlook (AVGO)

Goldman Sachs Raises Price Target on Avago; Boosts Outlook (AVGO)

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Goldman Sachs announced on Wednesday that it has boosted its price target on semiconductor company Avago Technologies Ltd (AVGO) following its third quarter results.

The firm has reaffirmed a “Buy” rating on AVGO, and has raised the company’s price target from $46 to $48. This new price target suggests a 24% increase from the stock’s current price of $36.56.

Analyst James Schneider commented: “Importantly, most of the upside in Avago’s quarter was due to a meaningful recovery in the industrial and networking end markets, which we think is being under-appreciated by the market.”

“In industrial, Avago posted very strong growth of 18% qoq, which is well ahead of peers as heavy industrial applications begin to inflect cyclically. In networking, Avago’s business remains very strong despite mixed outlooks from peers [Marvell (Nasdaq: MRVL) Semtech (Nasdaq: SMTC)} and customers [Cisco (Nasdaq: CSCO)] given the company’s exposure to next-gen standards,” the analyst added.

Looking ahead, the analyst raised the outlook for FY2013 from $2.42 to $2.55 per share. For FY2014, estimates have been raised from $3.05 to $3.15 per share. Estimates for FY2014 have been increased from $3.35 to $3.45 per share.

Avago Technologies shares were up $2.26, or 6.20%, during pre-market trading Wednesday. The stock is up 15% YTD.

The Bottom Line

Shares of Avago Technologies Ltd (AVGO) have a 2.30% yield based on Tuesday’s closing price of $36.56.

Avago Technologies Ltd (AVGO)is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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