Analysts Slash Broadcom Price Targets After Revenue Warning

AVGO is citing fallout from the U.S.-China trade war

Karee Venema
Jun 14, 2019 at 10:19 AM
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Broadcom Inc (NASDAQ:AVGO) stock is taking a big hit post-earnings, with the Apple supplier recording fiscal second-quarter revenue of $5.52 billion, less than the $5.68 billion analysts were expecting. What's more, the chipmaker slashed its full-year revenue forecast, citing headwinds from the U.S.-China trade conflict, including export restrictions on Chinese telecom Huawei Technologies.

More specifically, Broadcom said it now expects 2019 revenue to arrive at $22.5 billion, $2 billion less than it previously forecast. In a conference call, CEO Hock Tan said in the short term, there will be a "very sharp impact" from the Huawei ban, which creates "uncertainty in our marketplace." AVGO received $900 million in revenue from Huawei last year.

A round of bearish brokerage attention is only turning up the heat on AVGO stock, with at least 10 price-target cuts coming down the pike. Morgan Stanley is one of the names that chimed in on Broadcom, lowering its price target to $250 from $262, and saying the "negative outlook is above and beyond the impact that had been expected from Huawei."

The post-earnings downside move for AVGO stock is rare -- and likely caught a number of options traders off guard. At last check, the tech shares were off 7.4% at $260.63, falling back below their 200-day moving average, which failed as support in late May. This follows the equity's swift rejection from its 80-day moving average on Tuesday, with Broadcom pacing for a 4.3% weekly drop.


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