Japanese investment bank Daiwa Securities raised its rating on Broadcom (AVGO) stock to Buy from Outperform today, Schwab Network reported. As reasons for the upgrade, the bank cited “four strong drivers” for the company, along with the stock’s valuation.
A technician working at a magnified microscope, developing a new integrated circuit.
Broadcom’s “Four Strong Drivers”
AVGO is well-positioned to benefit from the strength of its application-specific integrated circuit processors and its networking products, Daiwa believes.
Additionally, Broadcom’s VMware unit should expand significantly, while its main semiconductor business is on the verge of returning to growth after delivering unimpressive results over the last two years, the Japanese firm stated.
The Valuation of AVGO Stock Is Attractive, Daiwa Says
After the shares tumbled 33% from their highs, the stock’s valuation is “attractive,” the Japanese investment bank stated.
Despite upgrading the shares, Daiwa cut its price target on the name to $225 from $275.
The Recent Price Action of AVGO Stock
In the last month, AVGO sank 11.5%, while it is down 27% in the last three months. However, over the last year, it’s up 24%.
While we acknowledge the potential of AVGO, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AVGO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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