March 4 (Reuters) - At least three brokerages raised their price targets on Sigma Designs Inc (SIGM.O) Thursday, a day after the chipmaker posted a better-than-expected quarterly profit, helped by higher demand for IPTV, and forecast strong first-quarter revenue.
Shares of the company, which makes chips for the IPTV set-top box market and Blu-ray players, rose as much as 7 percent to $13 Thursday morning on Nasdaq. They later pared their gains to trade up 1 percent at $12.24.
"The base business will likely remain volatile and competition looms in the media processor market," RBC Capital Markets analyst Mark Sue, who rates the stock "sector perform," wrote in a note.
"However, our view is that the worst may be over for Sigma," added Sue, raising his price target on the stock to $15 from $13.
On Wednesday, Sigma Designs, which competes with companies such as Broadcom Corp (BRCM.O) and Conexant Systems Inc CNXT.O, said it expects its target market to experience growth. [ID:nSGE6220KD]
"We anticipate IPTV revenue momentum will continue beyond the April quarter, driven by continued IP sub growth worldwide, along with significant design wins for Sigma," said Robert W. Baird analyst Tristan Gerra, who reiterated an "outperform" rating on the stock.
Collins Stewart analyst John Vinh reiterated a "sell" rating on the company, despite the impressive fourth-quarter results.
There is meaningful downside risk in the second half of 2010 as major carriers including BT Group Plc (BT.L) and AT&T Inc (T.N) transition to Microsoft Corp's (MSFT.O) next-generation Mediaroom IPTV set-top boxes, which will be exclusively Broadcom-based, Vinh said.
Vinh, however, raised his price target on the stock to $9 from $8.
Separately, UBS raised its price target on the stock to $13 from $11 and maintained a "neutral" rating. (Reporting by Manasi Phadke in Bangalore; Editing by Aradhana Aravindan)