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Palo Alto-headquartered Broadcom (AVGO) is in favor ahead of its fiscal second quarter (Q2) earnings set to be released late on Wednesday.
Consensus is for the custom AI chips specialist to record about $22 billion in revenue – up roughly 22% year-over-year – on $2.02 a share of earnings versus $1.33 per share a year ago.
Heading into the quarterly print, Broadcom stock is up some 39% year-to-date, but the derivatives market seems to believe it has significant further room to the upside.
Where Options Data Suggests Broadcom Stock Is Headed
According to Barchart, the put-to-call ratio on options contracts expiring at the end of this week (June 5) sits at 0.56 currently, indicating a strong bullish skew.
The upper price on those contracts is set at nearly $512, signaling AVGO shares could rally about 7.61% within days after the Q2 release.
Investors should also note that Broadcom’s technicals also suggest continued momentum ahead.
At the time of writing, the semiconductor titan sits decisively above its major moving averages (MAs), with an RSI in the mid-70s, reinforcing intense buying pressure heading into the earnings event.
Susquehanna Is Bullish on AVGO Shares Heading into the Q2 Print
AVGO inched higher on June 2 also because Susquehanna analysts raised their price target on them to $490, signaling further upside on the back of its upcoming Q2 release.
According to them, Broadcom is diversifying its artificial intelligence pipeline away from Google (GOOGL), particularly citing the Meta Platforms (META) deal, which they believe positions the firm as a go-to supplier for next-gen custom AI silicon.
Susquehanna remains constructive on Broadcom shares also because the company’s switching and routing silicon (like the Tomahawk and Jericho families) serves as the backplane connecting tens of thousands of GPUs or custom ASICs together in modern data centers.
A 0.55% dividend yield makes AVGO even more attractive as a long-term holding, the investment firm concluded.
What’s the Consensus Rating on Broadcom?
What’s also worth mentioning is that Susquehanna is actually among the more conservative Wall Street firms on AVGO stock.
The consensus rating on Broadcom sits at “Strong Buy” with price objectives going as high as $630, indicating potential upside of more than 30% from current levels.
