Irvine chipmaker Broadcom Corp. saw another analyst start following the stock late Wednesday, showing how Wall Street is more concerned about the company’s growth prospects than the legal troubles of its cofounders.
RBC Capital Markets analyst Mahesh Sanganeria started coverage of Broadcom with an “outperform” rating.
He said he expects the chipmaker to see 20% revenue growth this year and 14% in 2009.
Broadcom had 2007 sales of $3.8 billion.
The upbeat start of coverage was the second for Broadcom on Wednesday.
Daniel Berenbaum, an analyst with Cowen and Co. in Boston, also gave Broadcom an “outperform” rating and said the company’s “core enterprise and broadband businesses are holding up surprisingly well.”
Berenbaum said the company is set to see a boost in sales and recommended that investors buy more of the stock.
Broadcom’s business selling chips to the top makers of cell phones is set to drive sales growth, he said.
“While it has been a long time coming, Broadcom is poised to realize a large incremental revenue opportunity in wireless, driven by its single-chip products for handsets,” he said.
Broadcom’s decision to switch its reporting style to generally accepted accounting standards and its efforts to cut down unnecessary research spending is a good sign too, Berenbaum said.
“It is a signal to us that management is taking investor concerns much more seriously than in the past,” he said.
The additional analyst coverage comes as Broadcom has made news this month for the indictment of cofounder Henry “Nick” Nicholas and plea deal of cofounder Henry Samueli over the backdating of stock options.
Nicholas left the company in 2003 while Samueli recently stepped back from being chairman and technology chief to become an adviser to Chief Executive Scott McGregor.
Wall Street largely has discounted the legal issues and instead is focusing on the company’s growth prospects.
Shares of Broadcom opened down slightly with a broader downturn on Wall Street. The company has a market value of $14.5 billion.
