UPDATE - Auriga Downgraded Broadcom (BRCM) to Hold; Valuation Call Despite 'Beat & Raise'

UPDATE - Auriga downgraded Broadcom (NASDAQ: BRCM) from Buy to Hold, price target raised from $35 to $37.

Auriga analyst said, "We downgrade BRCM to a Hold, but increase our price target to $37 as the company beat our/consensus expectations for both print/guide on slight improvement in end demand, tighter than expected control on opex, and improved gross margins. BRCM also provided encouraging commentary on opex restraint and improving gross margins going forward, but our analysis shows that BRCM is also benefiting from one-time events like DTV/Blue-ray exit and winding down of legal expenses. While near-term trends look encouraging as China service provider spending returns, we see longer term challenges in the mobility/connectivity segment and also see increased risks with pending NetLogic (Nasdaq: NETL)(Hold) acquisition. We raise our CY12 estimates and introduce CY13 estimates. We view the stock as fairly valued at current levels as we expect BRCM to grow earnings at 10% CAGR for the next five years."

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