UBS Financial Ups Altera to 'Buy'

UBS Financial upgraded Altera (ALTR

) to buy from neutral.

Analyst Thomas Thornhill says the upgrade is based on a 24% upside to his $22 12-month target. At current prices, he doesn't strongly prefer either Altera or Xilinx over the other. He notes Altera's price-earnings ratio, vs. Xilinx, has declined from 1.3 times during the summer to 1 times, recently. Since then, both companies have similar outlooks; he thinks valuations should be roughly equal.

Thornhill expects Altera to report third-quarter sales of $210 million, up 2.5% -- the midpoint of its guided range. Also, Thornhill notes industry channel checks suggest that order and shipment patterns will support a few percent sales growth in the fourth quarter.

He sees 39 cents earnings per share in 2003 and 49 cents in 2004.