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QUALCOMM (QCOM) New Chip Not a Big Threat to Avago Technologies (AVGO) - RBC

February 21, 2013 12:45 PM EST Send to a Friend
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Price: $70.51 +0.84%

Rating Summary:
    20 Buy, 6 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 35 | Down: 23 | New: 13
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RBC Capital's Doug Freedman reiterated his Outperform rating and $41 price target on Avago Technologies (NASDAQ: AVGO) following QUALCOMM's (NASDAQ: QCOM) RF360 RFFE LTE/LTE-advanced chipset designed for mobile handsets. The analyst said the chip is not as threatening as it appears.

"We highlight that this solution is NOT an incremental negative to Avago, where its competitive edge is driven by FBAR filters (where we assume 70% market share) whereas Qualcomm's solution is SAW," Freedman states." Today’s solution appears to be a complementary solution to Avago's BAW filters in that it will operate as a “side-band”, servicing 1-2 bands of the 4-7 bands that smartphones typically service. Thus, Qualcomm’s SAW-based solution will enable improving performance in LTE markets operating along side BAW filters from Avago (or Triquent, also a BAW provider). The offering from Qualcomm reflects the general trend for integrated packaged (vs. same die) solutions that the market is moving towards. While the solution is not due to market until 2H13, given Qualcomm’s vast relationships and ability to cross-sell with its integrated LTE modem/connectivity, we will closely monitor the progress of market adoption as this solution becomes available."

The analyst views any weakness to Avago shares on today's news as an overreaction. However, he still expects estimates to reset post Avago's FQ113 earnings next Tuesday (February 26th) due to Apple weakness.

For an analyst ratings summary and ratings history on Avago Technologies click here. For more ratings news on Avago Technologies click here.

Shares of Avago Technologies closed at $34.67 yesterday.




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