) to overweight from equal-weight.
Analyst Arnab Chandra says he believes Silicon Labs could see a strong 2006 with the launch of its Aero 2-E (RF transceiver for handsets) in the fourth quarter, without which handset revenues have declined since its peak in the second quarter of 2004. He believes the Aero 2-E should stabilize market share and cause average selling prices to be flat after declining 20% from Aero 1 to Aero 2 since Aero 2 was not fully EDGE compliant.
Chandra keeps 2005 EPS estimate at $1.14, but raises $1.15 2006 estimate to $1.22. He has a $33 target price, or 22 times 2006 EPS estimate plus $6 cash per share.