Thursday, January 20, 2011

Silicon Image (NASDAQ:SIMG) Business Model Driving Share Gains

Silicon Image (NASDAQ:SIMG) has a business model which is driving share gains and are at the beginning of a multi-year product cycle, says Needham, which sees the company's share value growing over 30 percent.

Needham says, "Last week, SIMG’s CEO (Camillo Martino) and CFO (Noland Granberry) presented at the Needham 13th Annual Growth Conference. In our opinion, there were three notable items from the conference: 1) SIMG added a new HDMI DTV customer (we think LG-N/R); 2) introduced ViaPort technology to further differentiate from the SoCs; and 3) cable attach rates for MHL could add incremental revenues. Broadly, SIMG is in the first inning of a multi-year product cycle in mobile- DTV connectivity. In fact, we believe MHL could be a defacto standard on the majority of smartphones over the next 2-3 years. Moreover SIMG’s innovative standard-plus business model is driving share gains and growth in the DTV market. With the stock trading at a compelling valuation and multiple growth drivers, we continue to see value for the shares north of 30%...We are introducing our 2012 estimates of $270MM/$0.55. Our 2011 estimates of $220MM/$0.35 remain unchanged."

Needham & Company reiterates a "Buy" rating on Silicon Image (SIMG), which closed Wednesday at $7.27 gaining $0.32, or 4.60 percent. Needham boosted their price target on Silicon Image from $7 to $10.

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