Broadcom Stock Takes Breather Ahead of Earnings Report

AVGO hit a record high on Tuesday

Deputy Editor
Dec 8, 2021 at 3:20 PM
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The shares of semiconductor name Broadcom Inc (NASDAQ:AVGO) are putting a pause on their recent rally as investors look ahead to the firm's fiscal fourth-quarter earnings release, which is due out after the close tomorrow, Dec. 9. In fact, the equity broke past recent pressure at the $570 region yesterday to nab a record high of $593.07, following news that Broadcom acquired AppNeta in an effort to bolster its network performance monitoring across a number of applications. 

The stock was last seen down 0.5% at $587.37, though it boasts a year-to-date lead of  34.3%, with all major long- and short-term trendlines sitting below as potential support. This includes the 30-day moving average, which captured a late-November pullback before guiding the stock higher. 

avgo dec 8

Yesterday's news led Susquehanna to chime in with a pre-earnings bull note, lifting its price target to $650 from $640. The 12-month consensus price target now sits at $582.03, which is a slight discount to current levels. This could leave the door open for even more upgrades and/or price-target hikes from the brokerage bunch, as three of the 19 in coverage consider the equity a "hold." 

An unwinding of pessimism among options traders could also put some wind at AVGO's back. The stock's Schaeffer's put/call open interest ratio (SOIR) of 1.66 stands higher than 80% of readings from the past year. This suggests short-term options traders have been much more put-biased than usual. 

The security has a promising post-earnings past too. During its last eight reports, AVGO saw positive next-day returns six times, averaging a move of 2.8%, regardless of direction. This time around, options players are pricing in a slightly bigger swing of 5.1%. 

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