Goldman Sachs upgraded its investment rating on each of Applied Micro Circuits (AMCC ), PMC-Sierra (PMCS ), and Vitesse Semiconductor (VTSS ) to trading buy from market outperform.
Analyst Nathaniel Cohn says the upgrades reflect incrementally positive news likely over next the several months, possibility that his recently reduced estimates for many companies could prove to be too conservative. Although he continues to look upstream for data points to suggest a rebound in end demand, Cohn is beginning to believe he cut his estimates enough to show upside-driven operating leverage sooner than expected, even if it is only being driven by an inventory-related snapback. The analyst believes the rally may have some more legs. He has price targets of $40 target for Applied Micro, $55 for PMC-Sierra, and $50 for Vitesse.