The EU antitrust regulator has ordered Broadcom Inc (AVGO) to stop exclusivity deals with TV and modem manufacturers while an investigation is underway with the aim to determine if such agreements are meant to obstruct competitors.
Broadcom shares closed lower for the fifth time in the past thirteen trading sessions on NASDAQ on Wednesday. The stock went down 0.63% ($1.84) to $288.48, after touching an intraday high at $290.09 and an intraday low at $286.55.
Shares of Broadcom Inc have risen 13.45% so far in 2019 compared with a 19.26% gain for the benchmark index, S&P 500 (SPX).
In 2018, Broadcom Inc’s stock went down 1.02%, thus, it outperformed the S&P 500, which registered a 6.24% loss.
The regulatory authority’s major concern is associated with Broadcom’s deals with six TV set-top box and modem manufacturers, as a result of which these companies buy chips exclusively or quasi-exclusively from Broadcom.
“This will prevent serious and irreparable harm to competition likely to be caused by Broadcom’s conduct, which prima facie infringes EU competition rules,” the European Commission stated.
The order is valid for up to 3 years, while the US chip maker is given 30 days to comply with it, the European Commission said.
Analyst stock price forecast and recommendation
According to CNN Money, the 25 analysts, offering 12-month forecasts regarding Broadcom Inc’s stock price, have a median target of $330.00, with a high estimate of $370.00 and a low estimate of $265.00. The median estimate represents a 14.39% upside compared to the closing price of $288.48 on October 16th.
The same media also reported that at least 16 out of 29 surveyed investment analysts had rated Broadcom Inc’s stock as “Buy”, while 11 – as “Hold”.
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