Broadcom Valuation and Hold Rating Amid Price Correction

about 1 month ago

Parkev Tatevosian

"The market price is now to $339. The intrinsic value per share I upgraded today. It increased by a couple of dollars up to $376. So after applying a margin of safety, Broadcom stock looks fairly valued or slightly undervalued when measuring by my discounted cash flow model. However, I still have Broadcom stock rated as a hold because the company's market multiples valuation is still stretched in my opinion and I would like to see another five or 10% improvement or decrease in Broadcom's market price in order to upgrade the stock to a buy, but it's almost there given this big sell-off in Broadcom stock. I had the stock rated as a hold. I told investors it was too expensive in early December. I told investors not to buy this stock going into the earnings release."

The analyst analyzes Broadcom's current valuation following a significant price decline, noting that despite impressive revenue growth and accelerating AI initiatives, the company's expanding AI business is pressuring gross profit margins. He maintains a hold rating due to stretched market multiples, suggesting that a further 5-10% decline might trigger an upgrade to a buy.

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