Goldman Sachs Downgrades Broadcom, Removes From Americas Buy List

In a report published Friday, Goldman Sachs analyst Mark Delaney downgraded the rating on

to Neutral, while raising the price target from $53 to $58, following the announcement

intends to acquire the company for a total value of $37 billion. The analyst believes that there is a high likelihood of the M&A going through, although "Broadcom and Avago have very limited product overlap (per market share data) but some shared customers." Avago Technologies expects to be able to realize cost synergies of at least $750 million via this acquisition. "We believe synergies would be mostly in SG&A and to a lesser extent in COGS (from foundry and test volume discounts) and R&D (some common functions but there is limited direct product overlap)," Delaney said. At the same time, the analyst believes that Broadcom is "well positioned on a standalone basis," while expecting product cycles in 2H15 and 2016 "to drive solid sales and margins."