Wall Street’s largest mover on Friday was shares of Broadcom after the stock jumped more than 20%. The move marks Broadcom’s best on day returns in more than five years and puts the Semiconductor company’s market cap at a value of over $1 trillion.
Investors traded shares of Broadcom on heavy volume – though not its heaviest in the last three months – following the company impressive earnings report on Thursday.
For the latest quarter, Broadcom beat analyst expectations for earnings per share by $0.03. The company’s earnings per share results were $1.42.
Revenue for the quarter was in-line with expectations but showed an impressive year-over-year growth rate of 51.2%. That revenue growth is among the strongest in the semiconductor sector for the most recent quarter.
Investors were further impressed by the company's forward looking guidance.
Broadcom’s management team raised its revenue target for next quarter’s earnings to $14.6, higher than analyst’s current expectations. If hit, Broadcom would post revenue growth of 15% next quarter, still higher that the semiconductor industry.
Broadcom shares are now trading more than 100% higher than this time last year, placing the stock as one of the relative strength leaders among the Nasdaq 100.
As a result of today’s spike, Broadcom shares are registering an extreme overbought reading of their RSI. That, combined with high trading volume and a move outside of the stock’s Bollinger Bands (a statistical measure of volatility) creates a likely pullback situation for the stock.
Wall Street analysts are likely to begin upgrading their target prices on Broadcom after today’s move. The average target price for analysts today stands at $208.
Long-term investors hesitant to by AVGO at their current price of $226 may consider allowing the stock time to retrace to lower prices as the stock normalizes.
Broadcom stock maintains a bullish outlook with a price target of $300.
