Netlogic Microsystems: Potential Risk Seen In High Valuation

Merrill Lynch’s Srini Pajjuri yesterday morning cut his rating on Netlogic Microsystems (NETL) to Neutral from Buy in what was largely a valuation call. He notes that the stock has appreciated more than 40% this year.

“Though we expect NETL to continue to benefit from growth in emerging technologies such as 10G, VoIP and IPTV, we think valuation mostly reflects the company’s near term prospects,” he wrote in a research note. The company has new products coming, he says, but “high expectations leave little room for error in timing and the magnitude of these ramps, which could present some potential risk to the stock.”

Netlogic yesterday morning was down $1.32 at $29.27.

NETL 1-yr chart