J.P. Morgan Calls Broadcom Its Top Pick

The majority of analysts are already bullish on AVGO

Deputy Editor
Sep 4, 2019 at 9:53 AM
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J.P. Morgan Securities said this morning that is feels confident in the acceleration of semiconductor stocks for the second half of this year, calling Broadcom Inc (NASDAQ:AVGO) its top pick. The analyst cited promising seasonal demand and said that chip stocks should continue their upward momentum assuming the U.S. and China hold steady on trade tariffs. AVGO is up 1.4% at $277.85 in response. 

While the majority of the 25 in coverage already call the stock a "buy" or better, five still see it as a tepid "hold," which could spark tailwinds on the charts, should some of these analysts begin to change their tune. What's more, the consensus 12-month target price of $306 represents a slim 10% premium to current levels. 

Looking back, AVGO cooled considerably following its all-time peak of $323.30 on May 1. The stock was able to find its footing at its 320-day moving average, briefly closing its mid-May bear gap, before succumbing to pressure at its 100-day moving average. Despite this pullback, the stock still boasts a roughly 25% year-over-year gain.

Short-term options players have leaned bearishly lately. AVGO's Schaeffer's put/call open interest ratio (SOIR) of 0.93 sits in the 85th percentile of its annual range. This suggests that these traders have rarely been less call-heavy in the past year.

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