Altera: Gleacher Says Buy On Comms Spending
Posted by Tiernan Ray
Shares of programmable chip maker Altera (ALTR) rose $2.37, or 6.4%, to $39.33 after Gleacher & Co. analyst Ian Ing raised his rating on the stock to Buy from Neutral, and raised his price target to $44 from $32, on the belief that programmable logic device (PLD) makers will outperform the broader semiconductor market this year.
Wireline networking equipment should see strong spending this year, with the build-out of optical transport networks and the like, writes Ing. While carrier spending is broadly in decline, nevertheless the silicon content in such equipment is increasing for PLD makers because of rising complexity in communications protocols. Moreover, PLDs are continuing to take over parts of the chip market provided by ASICs, applications specific standard products (ASSP), and embedded microprocessors, he notes.
Ing writes that with a strong management team and successful implementation of its 40-nanometer chips, Altera deserves a multiple of 18 times projected earnings.
He does have some concern about a inventory correction that’s underway in the industrial and communications chip market, but he thinks Altera’s design wins will offset the bumps from that.
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