Broadcom Limited designs, develops and supplies a broad range of analog and digital semiconductor connectivity solutions, including wired infrastructure, wireless communications, enterprise storage and industrial & others. The Company's products are used in data center networking, home connectivity, broadband access, telecommunications equipment, smartphones and base stations.
AVGO Price Forecast Based on DCF Valuation
DCF Fair Value Target:
The table below illustrates the output of a discounted cash flow forecast using a variety of scenarios for Broadcom Inc. To summarize, we found that Broadcom Inc ranked in the 80th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 577.83% on a DCF basis. The most interesting components of our discounted cash flow analysis for Broadcom Inc ended up being:
The company's balance sheet shows it gets 75% of its capital from equity, and 25% of its capital from debt. Notably, its equity weight is greater than only 21.5% of US equities in the Technology sector yielding a positive free cash flow.
Broadcom Inc's effective tax rate, as measured by taxes paid relative to net income, is at 0 -- greater than just 0% of US stocks with positive free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
SMCI, PFPT, DXC, BOX, and DELL can be thought of as valuation peers to AVGO, in the sense that they are in the Technology sector and have a similar price forecast based on DCF valuation.
Synaptics (SYNA) is quite involved in some dealmaking as of recent. On the 20th of July, the company announced a $305 million acquisition of DisplayLink, only to complete the acquisition of Broadcom's (AVGO) Wireless IoT business a few days later, a deal announced earlier this month. Let's review the deals,...
The Value Investor on Seeking Alpha | July 27, 2020
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