Broadcom Inc. (NASDAQ:AVGO) stock traded lower by almost 1% during Monday’s premarket session as risk appetite cooled across big-cap technology stocks. Nasdaq futures fell 0.57%, while S&P 500 futures slipped 0.16%.
Broadcom had no major company-specific headline driving Monday’s early move. Instead, the decline came as technology stocks faced pressure from weaker index futures.
The stock is also working through a pullback from its June swing high. That could leave Broadcom more sensitive to broader market weakness ahead of its next earnings report.
Technical Analysis
Broadcom remains under pressure from a technical standpoint. The stock is trading 7.8% below its 20-day simple moving average of $396.06 and 6% below its 50-day SMA of $388.50.
Shares are also trading just below the 200-day SMA of $369.20. That makes the level important for traders. A move back above the 200-day average could strengthen the longer-term trend.
Momentum remains weak. The moving average convergence divergence, or MACD, is below its signal line, while the histogram is negative. That suggests buying momentum has faded and rallies may struggle to gain traction.
However, the longer-term picture remains more constructive. The 50-day SMA is still above the 200-day SMA following a golden cross in April.
Broadcom faces resistance near $407.50. Support sits around $358, near the stock’s July swing low. A break below that level could open the door to a deeper pullback.
Earnings And Analyst Outlook
Broadcom is scheduled to report earnings Sept. 2.
Wall Street expects earnings of $3.16 per share and revenue of $29.44 billion. Broadcom reported earnings of $1.69 per share on revenue of $15.95 billion in the year-ago period.
The stock trades at a price-to-earnings ratio of about 61.3, reflecting a premium valuation. Analysts have an average price forecast of $511.13.
BMO Capital Markets initiated coverage Friday with an Outperform rating and a $455 price forecast. Erste Group downgraded Broadcom to Hold on July 7. UBS maintained a Buy rating on June 4 but lowered its price forecast to $485.
Benzinga Edge Rankings
Broadcom’s Benzinga Edge scorecard shows a quality-led profile with weaker readings for value and growth.
Broadcom has a Momentum score of 53.34 and a Quality score of 95.11. Its Value score stands at 6.24, while its Growth score is 30.68.
The scores highlight Broadcom’s strong underlying business quality. However, its premium valuation and mixed momentum could put more pressure on the company to deliver strong results.
For longer-term bulls, the technical picture could improve if Broadcom moves back above its 200-day SMA and momentum strengthens ahead of earnings.
Top ETF Exposure
Broadcom is a major holding in several semiconductor-focused exchange-traded funds.
The iShares Semiconductor ETF (NASDAQ:SOXX) has an 8.12% weighting in Broadcom. The First Trust NASDAQ Technology Dividend Index Fund (NASDAQ:TDIV) has an 8.05% weighting, while the Invesco PHLX Semiconductor ETF (NASDAQ:SOXQ) has a 9.94% weighting.
Broadcom’s large weighting means significant inflows or outflows from these ETFs can contribute to buying or selling pressure in the stock.
AVGO Price Action
Broadcom shares fell 0.85% to $365.32 during Monday’s premarket trading, according to Benzinga Pro data.
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