Broadcom (AVGO) Pre-earnings Analysis


AVGO

Chart done on daily timeframe. Semiconductor companies have been big winners in the last 12 months. While most of the focus has gone to Nvidia and AMD, Broadcom has swiftly moved its way to all time highs, gaining more than 100% since this time last year. The rise in market valuation has moved its price to earnings ratio to 39, doubling its valuation from last year, and making the stock more expensive than the healthy average of 25-35. However when we compare AVGO to NVDA, AVGO is still far cheaper in terms of price to earnings ratio. Broadcom brings in more revenue and offers a healthier balance sheet, which explains the attention it has received in the last year. With earnings around the corner however, it will be put to the test to see if the numbers can justify its valuation. Analysts’ estimates are roughly the same as last quarter, which the company beat. With the demand in semiconductors rising, AVGO will likely continue to receive bullish attention. 

Technical analysis:

As of now, buyers are controlling the general trend. If you’re looking at the daily chart, you can utilize the 10/20 MA lines as support points to guide you on entry. As long as it holds those levels then buyers have a higher probability of taking it higher. The main resistance in focus is 1296.00, a breakout above that has a target of 1340.00-1350.00.