Jefferies Maintains a 'Buy' on Avago Technologies (AVGO); Product Cycle Story

Jefferies maintains a 'Buy' on Avago Technologies (NASDAQ: AVGO) price target raised $2 to $43.

Analyst, Mark Lipacis, said, "We remain buyers of AVGO after the JanQ print. At 14x our FY13 EPS, the valuation is compelling for a stock that has good visibility into growth based on product cycles in secular growth areas like Smartphones (Apple (Nasdaq: AAPL), Samsung, Motorola (NYSE: MMI)), and Data Centers (Cisco (Nasdaq: CSCO), Juniper (Nasdaq: JNPR), HP (NYSE: HPQ)). We also think AVGO's sell-in revenue recognition means upside surprises during an inventory restock, which we expect in 1H12."

"Although the Industrial and Automotive segment declined by 29% QoQ, we see restocking of inventories as potential tailwind from here. Revenue in this segment is now 36% off its peak and demand recovery in industrials in China could translate to upside in both revenue and GM."

Jefferies raises FY12 EPS estimate from $2.60 to $2.72 and FY13 from $2.92 to $3.07.

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 $35.90 yesterday.

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