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Broadcom Inc - Stock Quote AVGO

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Morningstar's Broadcom Inc Stock Analysis

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Broadcom and VMware Tie the Knot in $61 Billion Deal; Raising Broadcom FVE to $624

Abhinav Davuluri, CFA Sector Strategist

Analyst Note

| Abhinav Davuluri, CFA |

On May 26, narrow-moat Broadcom entered into a definitive agreement to acquire narrow-moat VMware in a cash-and-stock transaction that values VMware at $61 billion. VMware investors will receive $138.23 per share, made up of 50% received as $142.50 cash per VMware share and 50% received as 0.2520 shares of Broadcom stock. This represents a 44% premium to the closing price of VMware’s stock on May 20. Given our standalone fair value estimate for VMware is $175 per share, we think Broadcom shareholders are getting a good deal as management takes advantage of the recent technology sector sell-off and VMware’s temporary revenue growth headwinds stemming from transitioning from license to subscription and SaaS.

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Broadcom Inc's Company Profile

Business Description

Broadcom--the combined entity of Broadcom and Avago--boasts a highly diverse product portfolio across an array of end markets. Avago focused primarily on radio frequency filters and amplifiers used in high-end smartphones, such as the Apple iPhone and Samsung Galaxy devices, in addition to an assortment of solutions for wired infrastructure, enterprise storage, and industrial end markets. Legacy Broadcom targeted networking semiconductors, such as switch and physical layer chips, broadband products (such as television set-top box processors), and connectivity chips that handle standards such as Wi-Fi and Bluetooth. The company has acquired Brocade, CA Technologies, Symantec's enterprise security business, and has a pending deal to acquire VMware to bolster its offerings in software.

1320 Ridder Park Drive
San Jose, CA, 95131-2313
T +1 408 433-8000
Sector Technology
Industry Semiconductors
Most Recent Earnings Apr 30, 2022
Fiscal Year End Oct 31, 2022
Stock Type Cyclical
Employees 20,000

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