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Semiconductor maker Broadcom (AVGO) received a vote of confidence Wednesday, a day ahead of its fiscal third-quarter earnings report.
Oppenheimer analyst Rick Shafer reiterated his outperform rating on Broadcom and raised his price target to 190 from 180.
Broadcom stock, though, was down a fraction, near 176, in afternoon trading on the stock market today.
"Longer term, we like Broadcom for its dominant/diversified semiconductor portfolio and significant free-cash-flow potential," Schafer said in a research report. "We see ample upside as management executes on merger synergies and likely future accretive M&A."
On Monday, MKM analyst Ian Ing posited that Broadcom could seek a merger with Qualcomm (QCOM). Other possible M&A targets for Broadcom include Xilinx (XLNX), Cavium (CAVM) and Marvell Technology (MRVL), Ing said.
Also Monday, RBC Capital Markets raised its price target for Broadcom to 190 from 185 and continued to call it a "Top Pick."
Shafer is predicting a beat-and-raise Q3 report from Broadcom, with upside coming from "significant content growth" in Apple's (AAPL) upcoming iPhone 7. He estimates that Broadcom's chip content in the iPhone 7 is up about 30% over the iPhone 6S.
"Even in the bear case with Apple units down 10%-20% year over year, Broadcom could still post double-digit iPhone-related growth," Schafer said.
Analysts polled by Thomson Reuters expect Broadcom to earn $2.77 a share excluding items on sales of $3.76 billion in the July quarter. On a year-over-year basis, earnings per share are seen rising 24% with sales up 115%. Broadcom is two quarters into its massive $37 billion combination with the former Avago Technologies.
For the current quarter, Wall Street is modeling for Broadcom to earn $3.19 a share excluding items, up 27%, on sales of $4.06 billion, up 119%.
On Tuesday, Credit Suisse analyst John Pitzer reiterated his outperform rating on Broadcom and upped his price target to 200 from 180.