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Broadcom (AVGO) is in talks to acquire software firm SAS Institute as it looks to double down on its enterprise software offerings. Citing people familiar with the matter, The Wall Street Journal reports that the deal is valued between $15 billion and $20 billion and could close in the coming weeks.
The acquisition of SAS will accord Broadcom access to crucial analytics business intelligence and data management software that SAS currently sells. According to The Wall Street Journal, Broadcom is increasingly investing in enterprise software offerings as it looks to appeal to more business customers and compete with the likes of Microsoft (MSFT). (See Broadcom stock charts on TipRanks)
A push to acquire SAS Institute does not come as a surprise as Broadcom has grown to become a semiconductor powerhouse on the back of a string of acquisitions. In 2018, it struck a $19 billion deal for CA Technologies, followed by the acquisition of the enterprise software division of Symantec Corp., now known as NortonLifeLock (NLOK), for about $10.7 billion the following year.
The latest acquisition push comes after Broadcom failed to acquire Qualcomm (QCOM). The deal fell through after former President Donald Trump blocked it, citing security risks.
Credit Suisse analyst John Pitzer recently affirmed a Buy rating on the stock with a $580 price target, implying 19.40% upside potential to current levels. However, the analyst remains cautious about the company following a nearly no-cost settlement with the FTC.
“We see significant consolidation, slowing supply growth and performance hungry workloads especially around AI shifting the balance of ASP power towards Semis,” said Pitzer.
Consensus among analysts is a Strong Buy based on 17 Buys and 2 Holds. The average Broadcom price target of $543.71 implies 11.93% upside potential to current levels.
AVGO scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.