Auriga Maintains a 'Buy' on EZchip Semiconductor (EZCH); Growth to Resume as Inventory Correction Completed

Auriga maintains a 'Buy' on EZchip Semiconductor (NASDAQ: EZCH), PT increased by $1 to $37.

Auriga analyst says, "Management now expects CY11 revenue to be higher than CY10 revenue as a sharper than expected decline in Juniper (Nasdaq: JNPR)(Buy) revenue should be more than offset by growth at Cisco (Nasdaq: CSCO)(Hold) and other customers. We take up our estimates for CY11 driven by higher top line numbers and gross margins. Our CY12 top-line moves up marginally, but bottom line comes down based on the higher than expected ($27mln) guidance for 2012 non GAAP opex. We continue to believe that based on the strength of its existing design wins, EZCH is well positioned for strong revenue growth (20%-25% CAGR) and operating margin expansion over the next 4 years."

"Our CY11 estimate goes to $69.5mln/$1.17 from $67.5mln/$1.09mln (consensus at $69.2mln/$1.15). CY12 goes to $93.8mln/$1.71 from $91.9mln/$1.73 (consensus at $94mln/$1.72). Note that our CY12 EPS estimates have come down as management has guided non-GAAP opex at $27mln from $23mln in 2011, which is higher than what we had expected."

For more ratings news on EZchip Semiconductor click here and for the rating history of EZchip Semiconductor click here.

Shares of EZchip Semiconductor closed at $31.94 yesterday.

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