From Standard & Poor's Equity Research
Kaufman Brothers upgraded Agere Systems (AGR) to buy from hold, noting the company's third quarter results.
Analyst Shelby Seyrafi notes that the company's 22 cents non-GAAP earnings per share (EPS) came out ahead of his 14 cents estimate. He says Agere Systems expects its (100% gross margin) license revenue to grow 10% per year. He also notes that its non-storage business is not as weak as feared. He says that in light of Broadcom (BRCM)'s announcement last week that networking customers are carrying too much chip inventory, he's encouraged by Agere Systems's outlook. He raises his 55 cents fiscal year 2006 (ending September) EPS estimate to 61 cents and his 94 cents EPS 2007 estimate to $1.03, as a lower revenue assumption is countered by a better operating margin outlook. He has an $18 stock price target.