Baird is out with a nice call on Sigma Designs (NASDAQ:SIGM) saying their checks indicate that the company's HDTV shipments are now starting to ramp meaningfully, while strong IPTV momentum continues. Sigma has wins at many tier-one digital TV OEMs (HP (NYSE:HPQ), Sharp, LG, Pioneer, Sony (NYSE:SNE), Sampo, among others). The digital TV business is higher margin and could help Sigma's mix in the January quarter, in firm's view.
IPTV players Free and Korea Telecom have reported solid subs numbers over the past week and are on their way to reach 2007 goals. Free and KT use Sigma Designs' decoders, and these two telcos alone increased subs 234K units sequentially in 3Q
Baird believes Sigma is well positioned to lock in a significant portion of the second-generation IPTV set-top boxes next year. Competitive landscape remains muted, with competitors continuing to face hardware and firmware issues. Sigma is well positioned to participate in IPTV trials initiated by U.S. cable operators starting next year, per their checks.
Reits Outperform and $65 target on SIGM.
Notablecalls: Is the wording strong enough to push SIGM to the $60 level here? Worth a shot early on, in my view! Would not overstay my welcome in this one, though.