Citigroup Ups LSI Logic to 'In-Line'

Analyst Clark Westmont cites valuation, and increasing opportunities in the enterprise storage market

Citigroup upgraded LSI Logic (LSI ) to in-line from underperform.

Analyst Clark Westmont says the upgrade is based on a relatively attractive valuation, as well as LSI's opportunities in enterprise storage and digital consumer products. He says the gross margin leverage potential for LSI not what it used to be since it's increasingly using external wafer foundries for production, but there's good operating leverage as sales presumably rise to cover operating expenses.

Westmont raised the 19 cents 2004 earnings per share estimate to 27 cents mainly based upon slightly higher sales growth. He raised the $6.50 target to $11, and wouldn't consider LSI expensive at $11.

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