Auriga Downgrades EZchip Semiconductor (EZCH) to Hold; Moving to the Sidelines on Valuation and Higher Risk

Auriga downgraded EZchip Semiconductor (NASDAQ: EZCH) from Buy to Hold, price target lowered by $2 to $37.

Auriga analyst says, "Our analysis shows the current valuation is fully pricing in attractive growth prospects for the company, and, we are also seeing higher risk from ASIC competition as our checks suggest that Huawei's (private) internal ASICs may reduce NP-4 opportunity sooner than we had anticipated. We continue to model strong growth for 2H11 and 2012 on NP-4 ramp and leave our estimates unchanged, but expect top-line growth to drop to 12%-15% CAGR from 2012-2017, which is still higher than our expectations for the service provider edge router segment. Our analysis also suggests that an acquisition is unlikely because of the smaller TAM and slower growth prospects of the Layer 2-3 network processor segment (relative to embedded multi-core processors), where EZCH is already dominant from a design win perspective."

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 $34.87 yesterday.

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