Auriga Assumes Coverage And Upgrades NetLogic to Buy From Hold

According to Auriga, NetLogic Microsystems (NASDAQ: NETL) coverage is assumed and rating is upgraded to Buy from Hold and raise our price target to $49 from $39 as our analysis shows that the Optichron acquisition could boost growth to 20%-25% CAGR over five years.

Auriga reported that it sees the Optichron revenue contribution reaching $100mln- 200mln by 2015 as its checks suggest that the technology is well positioned to gain design wins at tier1 equipment vendors. “We also see NETL benefiting significantly from IPv6 transition, although we still see it as a 2013/14 event. We leave our top line estimates unchanged, as we haven't incorporated Optichron numbers yet, but tweak up EPS based on higher gross margin estimates. We expect pro-forma EPS to grow at 30% CAGR over the next five years as we see significant operating leverage in the model.”

NetLogic Microsystems closed yesterday at $42.23.