Broadcom's Valuation Shift Suggests a Near-Term Opportunity

about 1 month ago

Parkev Tatevosian, CFA

"Broadcom's market price at $340 is actually below the intrinsic value per share I calculated for the company at $376. However, if I apply my usual margin of safety for companies like Broadcom, which is roughly 10%, it brings the stock price closer to being fairly valued rather than undervalued, which is a big change because about a month ago, the stock price was overvalued compared to my intrinsic value per share calculation. So those that are on the sidelines waiting for a good opportunity to buy Broadcom stock, I think it's almost here. I still have the stock rated as a hold, but I wouldn't be surprised if that rating changes over these new next few days or next few weeks as the valuation adjusts."

The speaker outlines that Broadcom's current market price of $340 is now closer to its intrinsic value, calculated at $376, after applying a 10% margin of safety. This shift, driven by concerns over lower gross margins from a higher mix of AI revenue, has moved investor perception from overvaluation to near fair value or slight undervaluation. While he currently holds a 'hold' rating, he signals that an opportunity may soon emerge for those waiting to enter the stock.

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