Shares of Irvine-based communications chipmaker Broadcom Corp. fell Thursday after an analyst lowered his rating on the stock on concerns about slumping demand for set-top TV boxes.
Investors sent shares down nearly 5% on a market value of $14 billion.
Robert W. Baird & Co. analyst Tristan Gerra cut his rating on the chipmaker to “neutral” from “buy” and held his price target at $30 per share, according to a report on financial news Web site barrons.com.
Broadcom was trading at around $28.50 per share on Thursday.
Gerra said the downgrade reflects concerns that “current order strength is not sustainable relative to true end demand,” the report showed.
“While we expect strong Q3 results, there are signs of double-ordering, increasing the risk of cancellations in the first half of 2010,” he said in a research note. “Valuation is rich, in our view.”
He also cited a new report by In-Stat, a Scottsdale-based market tracker that’s a unit of Reed Elsevier Inc. It showed slowing demand for cable set-top boxes.
Broadcom is one of the biggest makers of chips that go into set-top boxes.
Worldwide shipments of set-top boxes are projected to reach 44 million in 2009, down 9% from 2008, In-Stat’s data showed.
The bulk of the slowdown is expected to come from North America and Western Europe, where cable operators have reduced their spending, the report said.
Declines in mature markets may be offset by growth of set-top box sales in Asia, Eastern Europe and Latin America, In-Stat said.
