Broadcom (NASDAQ:AVGO), which provides chips, enterprise software, and security solutions, is reportedly seeking to divest VMware’s End User Compute (EUC) business to the private equity firm KKR (NYSE:KKR) for $3.8 billion, Reuters reported. This move aligns with Broadcom’s strategy to streamline operations and concentrate primarily on its core businesses. EUC allows users to access desktops and apps from various devices.
Broadcom completed the acquisition of the software company VMware in November 2023. Later, during the Q4 conference call in December 2023, Broadcom’s CEO, Hock Tan, announced plans to divest VMware’s EUC and Carbon Black business units. Tan emphasized that the company will invest in VMware’s core areas, such as data centers, networks, and computing. Consequently, Broadcom aims to sell the EUC and Carbon Black divisions.
According to the report, a deal could be announced as soon as Monday.
AVGO’s Strong Guidance
For Fiscal 2024, Broadcom expects to deliver $50 billion in revenue, compared to $35.8 billion in Fiscal 2023. The guidance includes a $12 billion contribution from VMware.
Further, the company returned $15.3 billion to its shareholders in Fiscal 2023 through dividends and share repurchases. AVGO hiked its quarterly dividend by 14% to $5.25 per share. Including the recent hike, Broadcom has now increased its dividend for 13 consecutive years.
What is the Forecast for AVGO Stock?
AVGO stock has gained over 126% in one year, reflecting its strong financial performance amid challenging end-market demand. The company’s focus on enhancing shareholders’ returns through dividend hikes and share buybacks supported the uptrend in its share price.
AVGO stock has a Strong Buy consensus rating based on 19 Buy and two Hold recommendations. However, due to the rally in its shares, analysts’ average price target of $1,222.22 implies 5.72% downside potential from current levels.
