UPDATE: Jefferies Raises Target to $40 on EZchip Semiconductor

Jefferies remains Hold-rated on EXchip Semiconductor

and increases its price target to $40, up $5, on upside to gross margins. Jefferies says, "Q4 revenues and EPS beat, but Q1 revenue guidance missed by 7%, and visibility past Q1 remains limited. Prepayment of royalties to the Israeli office of chief scientist raised CY12 gross margin guidance by ~300bps to 81%. Our CY12 EPS increased to $1.17 (from $0.92) and we maintain our Hold rating on the stock. EZCH trades at a group-high EV/S of 10x (vs. group avg. EV/S of 3x), and we expect the stock to appreciate with the group." EZCH closed at $33.47 a share on Wednesday.