UPDATE: Morgan Stanley Raises PT on Avago Technologies, Stock Position Makes Attractive Growth Story
In a report published Tuesday, Morgan Stanley analyst Craig Hettenbach reiterated Overweight on Avago Technologies Ltd. (NASDAQ: AVGO), raising its price target to $68.00 from $51.00.
According to the report, AVGO's planned $6.6bn acquisition of LSI would be transformative. The analysts see the story evolving from “high” growth to “above-average” growth with a meaningful margin kicker.
“Since initiating on AVGO in July, we have positioned the stock as an attractive growth story,” the report noted. “The combination with LSI likely drives growth down a notch to 6-8% from low double digits, but still above most semis at 5-6%. On the other hand, we see substantial margin expansion and EPS accretion of ~$1.50. Net, net Avago's stripes are changing, but we remain Overweight and expect the stock to outperform. Please see pages 9-12 for detailed analysis of LSI's business.”
AVGO closed Monday at $52.64.
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