The chip maker generated profits and revenues that exceeded analyst estimates
Broadcom Inc (NASDAQ: AVGO) secured no less than 10 bull marks this morning after the company’s bullish earnings report for the second quarter. Broadcom reported quarterly earnings and earnings, both slightly above Wall Street forecasts. For the future, the chip maker gave a better than expected outlook as the introduction of 5G technology continues.
To get back to the deluge of bulls, it came in the form of target hikes, including a huge jump to $ 585 from $ 570 at JP Morgan Securities. In addition, UBS, Rosenblatt Securities and Jefferies all raised their price targets to $ 550. The majority of analysts today were extremely optimistic about AVGO. In fact, 18 out of 21 reported the security as a “buy” or better, three rated it as a “hold” rather than a “sell” in sight. Plus, the stock’s 12-month consensus target of $ 525.22 is a 13% premium over last night’s closing price.
Broadcom shares are relatively cautious, most recently up 0.2% to $ 465.68. On the charts, AVGO recently bounced off the $ 420 mark for the third time this year as the level solidified as the floor of the stock’s biggest setbacks. The smaller pullback from yesterday was saved by the 100-day moving average, which put the stock under pressure for almost a month. Since the beginning of the year, AVGO has increased by 6.2%.
Today’s option pits show calls and puts at a similar pace. So far, 2,683 calls and 2,098 puts have exchanged hands, four times what is normally seen at this point. The most popular is the weekly 6/4 477.50 strike call, followed by the 475 strike call from the same series. This means that options traders are speculating on more upside potential for AVGO until today’s market close.
Now seems like a good opportunity to weigh Broadcom stock’s next move with options. The stock’s Schaeffer’s Volatility Index (SVI) of 34% is above just 28% of all other values in its annual range, suggesting option players are currently pricing in relatively low volatility expectations.