Lehman’s Romit Shah Monday morning raised his rating on chip maker Atheros Communications (NASDAQ:ATHR) to Overweight from Equal Weight citing “a major design win” from Nintendo (OTCPK:NTDOY) for the DS handheld game system as well as “solid momentum in the core business.”
He raised his 2008 EPS estimate to $1.40 a share from $1.16, well above the Street consensus of $1.19. His ‘07 estimate is $1, up from 98 cents. He set a price target on the stock of $39.
Shah says the new business from Nintendo should generate $72 million to $96 million in incremental 2008 revenue. He expects the existing business - which includes chips for WiFi, Ethernet and Bluetooth - to grow 10% next year driven by continued strength in 802.11g chips and higher uptake of 802.11n.
Atheros Monday morning is up 69 cents at $33.27.
ATHR 1-yr chart: