On Thursday, Broadcom Inc. (NASDAQ:AVGO) shares edged slightly lower after agreeing to sell SaaS-based platform BlazeMeter CT to Perforce Software in an undisclosed deal. BlazeMeter is a SaaS-based continuous testing platform, which serves as a single solution for application quality for teams.
The platform will benefit from Perforce Software’s extensive community support and broad open-source development partner ecosystem. On the other hand, Perforce Software will leverage BlazeMeter to boost its offerings in the application quality market.
Is it time to invest in AVGO?
From a valuation perspective, Broadcom shares trade at an attractive forward P/E ratio of 14.86, making the stock attractive to value investors. Moreover, analysts expect its earnings per share to grow at an average annual rate of about 14.74% over the next five years, outshining its average of 5% previously.
Broadcom shares are up more than 34%, thereby outperforming the S&P 500 Index’s equivalent gain of 30%. However, given the stock’s attractive valuation and exciting growth metrics, it could still add to this year’s gain of about 14.87%.
Therefore, although the company did not disclose details of the BlazeMeter sale, the deal could still act as a catalyst for a rebound with shares down by more than 3.3% over the last three trading sessions.
Source – TradingView
There is room for more declines
Technically, Broadcom shares appear to be trading within an ascending channel formation in the intraday chart. However, the stock price recently pulled back to move closer to the 100-day moving average.
Therefore, with shares yet to reach the oversold conditions of the 14-day RSI, the current pullback could continue. As a result, investors could target extended declines at $76.70 or lower at $465.32. On the other hand, $497.92 and $510.20 are crucial resistance zones.
Sell short term?
In summary, although Broadcom shares have pulled back 3.3% in the last three trading sessions, the downward movement seems far from over.
Therefore, it could be best to short AVGO shares or wait for the stock to retest the current support levels before buying.
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