Shares of Broadcom Inc (NASDAQ:AVGO) were last seen up 0.4% at 361.20, after Macquarie Securities initiated coverage on the chipmaker with an "outperform" rating and $420 price target. The firm cited Broadcom's strength in the specialized chip market. Macquarie isn't the only firm bullish on Broadcom -- heading into today, 34 of the 39 analysts covering the stock recommend a "strong buy."
The stock is not far removed from a 9.4% post-earnings pop on Sept. 5, fueled by renewed interest in its AI capabilities and struggles from its biggest competitor Nvidia, which continues to face scrutiny over potential antitrust violations.
While AVGO attempts to reclaim last week's record highs, the 20-day moving average has stepped up as support. The stock is up an impressive 114.3% year over year and now forming a bullish flag pattern on the charts.
Broadcom continues to upend expectations but options traders have been skeptical in recent months. On the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day put/call volume ratio ranks in the 98th percentile of its annual range. Sentiment continues to shift, though, with calls outpacing puts today, 30,000 to 16,000. The most popular contracts are the monthly 400- and 370-strike calls.
Options are reasonably priced at the moment, too. AVGO's Schaeffer's Volatility Index (SVI) of 38% ranks in the low 3rd percentile of its annual range, meaning options traders are pricing in low volatility expectations. It's also worth mentioning that the equity has tended to outperform volatility expectations over the past year, as suggested by its Schaeffer's Volatility Scorecard (SVS) of 79 out of 100.
