Tuesday, January 23, 2007

BWS Financial Defends Sigma Designs (SIGM) After Rumor Related Weakness

BWS Financial notes that Monday's sharp decline in Sigma Designs (Nasdaq: SIGM) could have been related to unsubstantiated rumors that the Company was once again switching auditors and that there was more to the stock option situation than what is known.

Analyst Hamed Khorsand said, "We believe that the rumors have little basis for such a steep drop in the stock price given that SIGM has been forward with the ongoing option situation. The fundamentals at SIGM remain strong and we believe should allow SIGM to post an impressive year in amount of chipsets sold and revenue generated. We have previously noted that it seems as though the Company has won new carriers for set-top boxes with chipsets from SIGM. Our fiscal 2008 numbers continue to seem conservative as we have cited before, and would be raised with the official announcement of the design wins we have discussed. SIGM shares currently trade at 50 percent discount to our price target, or approximately 100 percent upside to $40. The upside currently outweighs the risks and we would be aggressive buyers at current levels." The firm maintains its Strong Buy rating.

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