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Broadcom’s Shares Upgraded on CEO McGregor’s Bullish Outlook

Irvine-based Broadcom Corp., a maker of communications chips, on Thursday was upgraded by a Wall Street analyst after its chief executive said he expects sales to outpace the market.

Goldman Sachs & Co. analyst James Schneider upgraded the company’s stock to “buy” from “neutral” and upped his stock price target to $40 per share, up from a previous target of $32, according to an Associated Press report.

Broadcom’s shares were trading at around $34 on Thursday with a market value of $16.8 billion.

Schneider said he sees Broadcom growing market share for cell phones chips by more than 13% by the end of 2011, up from about 3% or 4% share in the fourth quarter of last year, the report showed.

He also said he expects Broadcom to see growth from networking chips as wireless service providers upgrade their systems to handle more data traffic from cell phones.

The upgrade comes on the heels of a bullish outlook by Broadcom Chief Executive Scott McGregor, who said he expects the company to surpass the chip industry’s sales growth this year on strong consumer demand for cell phones and televisions, a Reuters report showed.

McGregor, in an interview in Taiwan, said industry forecasts call for chip sales growth of 15% to 25% this year.

“We don’t guide our revenue beyond the current quarter, but our management bonus plan pays out only if we significantly outgrow the industry,” McGregor told Reuters.

“Broadcom almost every single year significantly outgrows the semiconductor industry and our goal is to continue to do that,” he said.

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