Why Avago Shares Accelerated


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Avago Technologies have gained 10% today after the company reported strong earnings following Wednesday's market close. Shares have also been buoyed by increasing analyst optimism for the company, particularly after Avago raised its guidance.

So what: Avago's second-quarter revenue of $562 million and net income of $0.61 per share both bested Wall Street's expectations, which had sought $557 million and $0.58 per share. The company boosted its revenue guidance range for the current quarter to $596 million to $613 million, which on the high end is well above Wall Street's $600 million consensus.

Now what: Some analysts reiterated their bullish outlooks after the report. Deutsche Bank's Ross Seymore raised his his fiscal-year EPS expectations and raised his price target from $40 to $45 per share. RBC Capital reiterated a buy rating, as did HighPeaks Analytics' JoAnne Feeney and Lazard Capital Markets' Ian Ing, whose price target matches Seymore's. These analysts are generally expecting nearly 20% upside left, which is a pretty solid gain and worth investigating, particularly as Avago's valuation remains attractive even after its pop.

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The article Why Avago Shares Accelerated originally appeared on Fool.com.

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