Chip Stock Higher on $61 Billion Merger

The stock hit a record high just last month

Deputy Editor
Aug 21, 2023 at 10:49 AM
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Semiconductor stock Broadcom Inc (NASDAQ:AVGO) is moving higher today, up 2.3% at $845.00, after U.K.'s competition regulator cleared the company's deal to acquire VMware (VMW) for $61 billion, excluding debt. The merger is expected to close on Oct. 30. 

AVGO recently hit a July 25 record high of $923.18. Though the stock has slipped since then, with recent pressure at the $850 level, its 80-day moving average lingers below as potential support. It's also worth noting that the security's 14-day relative strength index (RSI) of 31.1 is nearing "oversold" territory, which typically indicates a short-term bounce. Year to date, the equity is up 51.8%. 

Calls are much more popular than usual in the options pits. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AVGO's 50-day call/put volume ratio of 1.76 ranks higher than 90% of readings from the past year. 

Analysts lean bullish as well. Of the 20 analysts in coverage, 15 carry a "strong buy" rating, with five a tepid "hold." The 12-month consensus price target of $883.70 is a 4.5% premium to current levels. 

 

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