Analysts Slash Broadcom Price Targets After Revenue Warning

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

Jun 14, 2019 at 10:19 AM
facebook twitter linkedin


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.

 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

 


 


 
Special Offers from Schaeffer's Trading Partners