Analysts Weigh In On Broadcom's Exploration of 'Strategic Alternative' For Baseband Business

Broadcom BRCM announced Monday that it will be seeking strategic alternatives for its baseband business which could include either a sell-off or a wind-down.

The bulls have taken this as a sign to drive the company's shares up as the stock jumped over $4 from Friday's close to open at $36 on Monday. The stock is floating right around the $36 mark Tuesday and at last check was sitting at $35.86.

Following this news, a number of analysts have put in their two cents as what this could mean for the company.

Jefferies believes Broadcom's earnings could see a benefit of up to $0.67 per share once the transaction is complete. Moreover, the analysts say Broadcom's cellular baseband business presents a "cellular options straddle" or a "heads I win tails I win" situation. The analysts explained the meaning as the company will either see leverage with success or "substantial" savings by exiting.

Over at Macquarie, the analysts were not surprised by Broadcom's announcement and commented, "Broadcom finally announced its much anticipated exit from the baseband business... While a cellular exit was one of the primary reasons to own the stock, we believe more catalysts abound in 2H and remain Outperform rated on Broadcom."