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Monday, Sigma Designs (NASDAQ:SIGM) shares slumped 12% after Jeff Schreiner, an analyst at American Technology Research, cut his rating on the stock to Sell from Neutral. Schreiner said Sigma was facing new competition in the media processor segment for low-end IPTV set-top boxes in China and India.

Today, the bulls struck back. N. Quinn Bolton, an analyst at Needham, raised his rating on the stock to Buy from Hold, asserting that nothing much has really changed on the competitive front, with SIGM “still the best positioned supplier of IPTV set-top box SoCs [systems on a chip].”

He says Sigma “remains the supplier of choice” for leading set-top box makers including Cisco’s (NASDAQ:CSCO) Scientific Atlanta unit, Motorola (MOT) and others. Bolton, who has a $28 price target on the stock, says investors should use the pullback as a buying opportunity.

Jay Srivatsa, an analyst at Roth Capital, repeated his Buy rating and $38 target on the stock, and asserted that neither Broadcom (NASDAQ:BRCM) nor STMicrolelectronics (NYSE:STM) pose a meaningful threat to Sigma in China or India. He raised his EPS estimate for the fiscal first quarter ended April to 27 cents from 23 cents. For the 2008 fiscal year he goes to $1.14 a share from $1.08. Srivatsa agrees that yesterday’s sell off “represents a buying opportunity.”

Sigma, which yesterday fell $3.33, today is up 57 cents at $24.

Source: Sigma Designs: The Bulls Fight Back