Wall Street Bulls Look Optimistic About Broadcom Inc. (AVGO): Should You Buy?

14.06.24 15:30 Uhr

When deciding whether to buy, sell, or hold a stock, investors often rely on analyst recommendations. Media reports about rating changes by these brokerage-firm-employed (or sell-side) analysts often influence a stock's price, but are they really important?Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about Broadcom Inc. (AVGO).Broadcom Inc. currently has an average brokerage recommendation (ABR) of 1.21, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 29 brokerage firms. An ABR of 1.21 approximates between Strong Buy and Buy.Of the 29 recommendations that derive the current ABR, 26 are Strong Buy, representing 89.7% of all recommendations.Brokerage Recommendation Trends for AVGOCheck price target & stock forecast for Broadcom Inc. here>>>While the ABR calls for buying Broadcom Inc., it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation.In other words, their interests aren't always aligned with retail investors, rarely indicating where the price of a stock could actually be heading. Therefore, the best use of this information could be validating your own research or an indicator that has proven to be highly successful in predicting a stock's price movement.Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock's price performance in the near future. Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision.Zacks Rank Should Not Be Confused With ABRIn spite of the fact that Zacks Rank and ABR both appear on a scale from 1 to 5, they are two completely different measures.Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.It has been and continues to be the case that analysts employed by brokerage firms are overly optimistic with their recommendations. Because of their employers' vested interests, these analysts issue more favorable ratings than their research would support, misguiding investors far more often than helping them.In contrast, the Zacks Rank is driven by earnings estimate revisions. And near-term stock price movements are strongly correlated with trends in earnings estimate revisions, according to empirical research.In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks.Another key difference between the ABR and Zacks Rank is freshness. The ABR is not necessarily up-to-date when you look at it. But, since brokerage analysts keep revising their earnings estimates to account for a company's changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in indicating future price movements.Should You Invest in AVGO?Looking at the earnings estimate revisions for Broadcom Inc., the Zacks Consensus Estimate for the current year has increased 0.3% over the past month to $47.16.Analysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term.The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #2 (Buy) for Broadcom Inc. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>Therefore, the Buy-equivalent ABR for Broadcom Inc. may serve as a useful guide for investors.Free – 5 Dividend Stocks to Fund Your Retirement Zacks Investment Research has released a Special Report to help you prepare for retirement with 5 diverse stocks that pay whopping dividends. They cut across property management, upscale outlets, financial institutions, and a couple of strong energy producers.5 Dividend Stocks to Include in Your Retirement Strategy is packed with unconventional wisdom and insights you won’t get from your neighborhood financial planner.Download Now – Today It’s FREE >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Broadcom Inc. (AVGO): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks

Quelle: Zacks

Nachrichten zu Broadcom Corp.

Analysen zu Broadcom Corp.

DatumRatingAnalyst
03.12.2015Broadcom HoldCanaccord Adams
20.08.2015Broadcom HoldArgus Research Company
03.08.2015Broadcom HoldCanaccord Adams
31.07.2015Broadcom Market PerformCowen and Company, LLC
31.07.2015Broadcom HoldTopeka Capital Markets
DatumRatingAnalyst
29.05.2015Broadcom BuyBrean Capital
28.05.2015Broadcom BuyArgus Research Company
22.04.2015Broadcom OutperformRBC Capital Markets
22.04.2015Broadcom BuyTopeka Capital Markets
22.04.2015Broadcom BuyBrean Capital
DatumRatingAnalyst
03.12.2015Broadcom HoldCanaccord Adams
20.08.2015Broadcom HoldArgus Research Company
03.08.2015Broadcom HoldCanaccord Adams
31.07.2015Broadcom Market PerformCowen and Company, LLC
31.07.2015Broadcom HoldTopeka Capital Markets
DatumRatingAnalyst
22.07.2013Broadcom verkaufenExane-BNP Paribas SA
11.04.2013Broadcom verkaufenBarclays Capital
26.03.2013Broadcom verkaufenExane-BNP Paribas SA
12.11.2012Broadcom underperformExane-BNP Paribas SA
18.10.2012Broadcom underperformExane-BNP Paribas SA

Um die Übersicht zu verbessern, haben Sie die Möglichkeit, die Analysen für Broadcom Corp. nach folgenden Kriterien zu filtern.

Alle: Alle Empfehlungen

Buy: Kaufempfehlungen wie z.B. "kaufen" oder "buy"
Hold: Halten-Empfehlungen wie z.B. "halten" oder "neutral"
Sell: Verkaufsempfehlungn wie z.B. "verkaufen" oder "reduce"