Shares of semiconductor company Broadcom (AVGO) sank in today’s trading as investors await its Q3 earnings results on September 5 after the market closes. Analysts are expecting earnings per share to come in at $1.22 on revenue of $12.963 billion. This equates to 16.2% and 46.2% year-over-year increases, respectively, according to TipRanks’ data. It’s worth noting that Broadcom has beaten earnings estimates for 15 consecutive quarters.
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And there are reasons to believe that this win streak could continue. In fact, according to TipRanks’ Bulls Say, Bears Say tool, bullish analysts point to the company’s AI revenue growth as a catalyst since it raised guidance for this segment from $10 billion to over $11 billion. This is due to the momentum being seen in custom AI silicon.
Nevertheless, it is important to not forget about the bearish arguments. This includes an increase in customer churn due to significant changes in pricing and subscription models following the integration of VMware, a cloud computing company that was acquired by Broadcom almost a year ago. In addition, since investors are likely expecting the earnings beat streak to continue, a surprise miss will make the stock much more vulnerable to a large drop.
What Do Options Traders Anticipate?
Using TipRanks’ Options tool, we can see what options traders are anticipating from the stock immediately after its earnings report. Indeed, the at-the-money straddle suggests that options traders expect a 7.36% price move in either direction. This estimate is derived from the $152.50 strike price, with call options priced at $5.75 and put options at $5.49.
Is AVGO Stock a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AVGO stock based on 22 Buys, one Hold, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 78% rally in its share price over the past year, the average AVGO price target of $196.90 per share implies 28.9% upside potential.
