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

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


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 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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