August 27, 2008
Analyst Actions: Broadcom, Marvell Technology
OPPENHEIMER DOWNGRADES BROADCOM TO PERFORM FROM OUTPERFORM
Oppenheimer analyst Allan Mishan says after five consecutive quarters of increases in year-over-year revenue growth, he believes growth for Broadcom (BRCM) is set to slow beginning in fourth quarter, which could affect p-e multiple for several quarters.He notes that sequential trends won't look great and should continue in first half 2009 with seasonality and end of Verizon royalty, which could be difficult for momentum/growth stock like BRCM.
Mishan believes broadband and enterprise has likely been running ahead of consumption; he notes some of strength may be inventory- or order pattern-related; concerned return to trendline will hurt Broadcom's future revenues. He says lack of operating leverage should remain a lingering issue for next few quarters.
He sees $1.70 2008 EPS and $1.55 2009.
JEFFERIES DOWNGRADES MARVELL TECHNOLOGY TO HOLD FROM BUY
Jefferies analyst Adam Benjamin says he recommends investors move to sidelines regarding Marvell Technology Group (MRVL) due to potential hard-disk drive [HDD] inventory and material share loss at Research In Motion (RIMM).
Benjamin says checks indicate MRVL most likely lost design for RIMM Javelin to Freescale Semiconductor; he thinks many investors are underestimating the magnitude of that loss. He also sees moderating Western Digital share gains. He notes the company's overshipment of its Desktop and Mobile system-on-a-chips in the last three quarters.
He cuts $0.97 fiscal year 2009 [January] EPS estimate to $0.91 and $1.10 for fiscal year 2010 to $0.97. He no longer believes MRVL deserves a premium multiple due to high exposure to maturing HDD market and weak cellular positioning. He cuts $22 price target to $15.