Broadcom Agrees to Settle FTC’s Monopoly Charges

Broadcom (AVGO) has agreed to settle the Federal Trade Commission (FTC) charges that it engages in anti-competitive practices, according to a Wall Street Journal (WSJ) report.

Broadcom supplies semiconductor chips used in a variety of products such as Internet modems and television set-top boxes. The FTC accused the company of using its market dominance to discourage customers from purchasing from its rivals. The regulator alleged that Broadcom threatened to raise prices for a customer if it did not reduce purchases from its competitor.

Although Broadcom has agreed to settle with the FTC, it denies any wrongdoing. Instead, it believes the settlement will allow it to focus on more important matters. (See Broadcom stock chart on TipRanks).

“While we disagree that our actions violated the law and disagree with the FTC’s characterizations of our business, we look forward to putting this matter behind us and continuing to focus on supporting our customers through an environment of accelerated digital transformation,” said Broadcom in a statement.

For the settlement, the FTC has proposed a number of conditions, including prohibiting Broadcom from entering into certain exclusivity agreements with customers, according to the WSJ report.

In June, Bank of America (BofA) analyst Vivek Arya reiterated a Buy rating on Broadcom stock with a price target of $580. Arya’s price target suggests 23.89% upside potential.

The analyst reaffirmed the bullish view after Broadcom CEO spoke at the BofA Global Tech Conference. The executive’s presentation revealed strong orders, confidence in the sustainability of the product cycle, and arrangements with supply partners to meet demand.

“AVGO remains to us extremely attractive for both growth and income investors given its 10% sales/15% EPS growth through 2023, multiple growth engines, industry-best profitability,” commented Arya.

Consensus among analysts is a Strong Buy based on 16 Buys and 2 Holds. The average Broadcom price target of $541.44 implies 15.65% upside potential to current levels.

AVGO scores a 6 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to perform in line with market averages.

Broadcom Agrees to Settle FTC’s Monopoly Charges – Report