Investors have fresh reasons to show interest in Broadcom and Goldman Sachs with new developments highlighting their portfolios. Deal King: Coterra Energy has appointed Goldman Sachs as the financial advisor for its substantial $58 billion all-stock merger with Devon Energy. This represents the largest energy sector deal since Diamondback's $26 billion acquisition of Endeavor Energy Resources in 2024, a transaction Goldman was also involved in. This partnership is a positive sign for Goldman's investment banking division, which comprised 15% of its revenue last year.
After Goldman's recent earnings report, CEO David Solomon noted that mergers and acquisitions tend to generate further activity across the company's operations. These continuous announcements reaffirm confidence in the stock, which has seen a 7.6% increase year-to-date, outperforming the S&P 500's 1.5% rise. The Club initiated a position in late 2024, banking on a recovery in investment banking following Donald Trump's election as President, which is now materializing. The Club has set a target price of $1,050 for Goldman, maintaining a '2' rating, indicating a buying interest on potential pullbacks.
Chip Potential: Broadcom has been marked for buying opportunity by Mizuho, which highlighted the firm’s potential earnings growth in custom chip business ventures. Although Broadcom's shares have dropped nearly 20% from their December peak and about 3.6% this year, Mizuho analysts identified Meta Platforms as a possible major client worth $10 to $15 billion. Previously, Broadcom benefited from its collaboration with Alphabet's Google in developing tensor processing units. Mizuho projects a 50% increase in average selling prices for these units in the coming years. While Mizuho maintains a buy-equivalent rating for Broadcom with a target price of $480 per share, indicating a 44% potential upside from the current price of around $332, the Club is cautious and awaits further pullback before reconsidering its hold-equivalent '2' rating. Their target price stands at $425.
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