AVGO
Broadcom Inc.
$352.81
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 171.6% above fair value
You pay
$352.81
Bear
$80.15
Fair
$129.90
Bull
$185.07
Bear
$80.15
-77.3%
9% stage 1 growth, 12% discount
Fair
$129.90
-63.2%
15% stage 1 growth, 12% discount
Bull
$185.07
-47.5%
20% stage 1 growth, 12% discount
Adjust Assumptions
15.0%
12.0%
3.0%
Key Value Driver
FCF growth rate (15% base case)
Terminal Value % of EV
39%
Implied Market Multiple
70.5x
Market is pricing in (growth)
28.0%
vs 15.0% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (60 analysts)
$509.61
Divergence from AlphaVal
75%
Summary
Using a two-stage FCF DCF with 15% growth decelerating over 15 years, discounted at 12%, the base-case intrinsic value is $129.90 per share.
Warnings
Stock-based employee pay equals 33% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $509.61 (from 60 analysts). Our estimate is 75% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions