Broadcom (NASDAQ: AVGO) stock price rallied sharply this year amid improving sentiments for semiconductor companies. AVGO shares crossed $300 mark; the shares are currently hovering around an all-time high of $325.
The shares grew almost 24% year to date. Fortunately, analysts are seeing the extension of upside momentum into the New Year.
Semiconductor and infrastructure software solutions company has also been optimizing investor’s sentiments through big cash returns. The company has returned $1.1 billion through dividends and $1 billion in share buybacks during the latest quarter.
It has raised the quarterly dividend in the past eight successive years. The company offers a quarterly dividend of $2.65 a share, yielding above 3.3%.
Morgan Stanley Raised Broadcom Stock Price Target
Morgan Stanley increased AVGO shares target to $367 from the previous target of $298. The firm has provided Overweight ratings from Equal-Weight rating. Morgan Stanley analyst Craig Hettenbach believes AVGO’s software strategy is likely to support financial numbers and share price.
Hettenbach said, “Broadcom is well-positioned in the Data Era since the company can build on its market lead in semis while routing FCF into the software.” The analyst claims AVGO appears in a better position compared to other companies in the semis industry.
Financial Growth and Dividends Supports AVGO shares
The company has generated revenue growth of 9% year over year in the third quarter. Its gross margin also improved to 55% from 51.7% in a year-ago period. The company’s earnings per share jumped to $1.71 per share from $1.64 in the previous quarter. Share buybacks and the improvement in margins helped in generating earnings growth.
“Our broad portfolio of mission-critical semiconductor and infrastructure software solutions continued to drive sustained revenues and robust cash flow,” said Hock Tan, President, and CEO of Broadcom Inc.
Its dividends are safe considering cash generation and outlook. The company has generated $2.3 billion in free cash flows in the latest quarter. In addition, the company expects to report a full-year revenue of $22 billion, up from $20 billion in the past year period.
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