Pacific Growth Downgrades NETGEAR

Analyst Erik Suppiger says that pricing pressure could hurt the networking product company's upside potential in the first half of 2005

Pacific Growth downgrades NETGEAR (NTGR ) to equal-weight from overweight.

Analyst Erik Suppiger says he's concerned that price pressure in home networking market could pose a challenge over the next couple of quarters. He says he believes December-quarter results were in line with estimates due to seasonal strength, but he feels price drops, particularly in 802.11g and Super G products, cut the prospect for a potential upside in the first-half of 2005.

He thinks the company will be challenged to offset noted price drops over the next few quarters. Given heightened near-term risk to top line and the potential for corresponding margin degradation, Suppiger would equal-weight the company.

He retains his 95 cents 2005 earnings per share estimate.

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