Analysts Positive on Zoran, Cautious on Economy

Jun.11.08 | About: Zoran Corporation (ZRAN)

Yesterday, Zoran (NASDAQ:ZRAN) held an analyst day at its Sunnyvale, CA headquarters. It was well attended by Wall Street, and analysts generally left the event confident on the firm’s growth drivers and strategy, but were still very worried about the current macroeconomic milieu.

Deutsche Bank (NYSE:DB) believes in the Zoran story, as it believes the firm will continue to see strong growth in digital TV and mobile phones in the second half of 2008. The bank believes ZRAN will conies to see demand driven from emerging markets with some support provided by converter box revenues. In a note to investors published yesterday, DB analysts said the leader in the consumer semiconductor market believes “that it is gaining share in printing, DVD, mobile phones, TVs, and printing.”

Goldman Sachs (NYSE:GS) analysts attending analyst day point to some other growth drivers in 2008 like LCD TVs, handset applications processors, and digital still cameras. Says Goldman analysts, “Our latest checks suggest that digital camera sales remain robust, and we believe that business should recover nicely in 2H08. Given these factors, we remain confident in our revenue growth expectations for this year.” Goldman’s top line growth estimate for Zoran shows growth of about 11% in 2008 over 2007 numbers of $500m+ in revenues.

Both DB and GS analysts have a $17 price target slapped on ZRAN. Having read both analysts reports, clearly, these firms see the potential for upside in ZRAN given so many growth drivers. That said, neither analyst could get comfortable with Zoran in the current macroeconomic environment.

Ever since Jeffries downgraded the stock, we’ve been generally positive on Zoran. We’ve discussed Zoran previously and have even featured the firm as our stock of the month for our premium subscribers.

Disclosure: The author’s fund has a position in ZRAN.