J.P. Morgan Reiterates Neutral Rating on Atheros Communications (ATHR)

J.P. Morgan is out with an analyst note this morning, where they reiterated their Neutral rating on shares of Atheros Communications (NASDAQ: ATHR); they have a $47.00 price target on the stock.

JPM analysts said that their “checks indicate that 2Q is tracking to plan (revenues up 9.5% Q/Q at mid- point of prior guidance range) and believe strength in networking was driven by share gains at Linksys and consumer is starting to see initial shipments into gaming customers, and ramp of new handset customers.”

During their investor conference call, Atheros’ CFO, Mr. Jack Lazar, indicated that they have “not seen any negative demand trends out of Europe (PLC business) so far, with sell through activity relatively good in that region. We believe gaming platform upgrades (Xbox with built-in Wi-fi and Nintendo next gen DS platform), WLAN-enabled DTVs and BD players will be a meaningful driver of ATHR's revenues in 2H of this year along with the seasonal pick up in PCs augmented by ASP increases as the company moves its PC customers from 1x1 802.11n to higher ASP 2x2 solutions (~25-30% premium).”

J.P. Morgan added, “Atheros will continue to focus on providing comprehensive and low-cost connectivity solutions for the networked home, given the uptake of high definition video and new deployment models (over-the-top services) and proliferation of internet enabled devices.”

The analysts said, “BRIC countries represent significant growth opportunities where high-speed networks are being rapidly deployed, low cost PC's have been quickly proliferating, and services like video-on-demand (VoD) and IPTV are relatively easier to deploy.”

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