UPDATE: Canaccord Genuity Downgrades Spreadtrum Communications to Hold on Margin Challenges

Canaccord Genuity reduced its rating on Spreadtrum Communications

from Buy to Hold and lowered its price target from $22 to $20. Canaccord Genuity said, "Spreadtrum reported solid Q3/12 results but issued sales guidance below our expectations when factoring the unexpected continuation of their product acceptance programs and deferred revenue. Further, despite guidance for Q4/12 smartphone solution sales to increase 64% sequentially to 18M units, Spreadtrum management guided to sequentially flat Q4/12 gross margin. Going forward, we believe pricing pressure in both the 2G feature phone and EDGE smartphone markets, increased TD-SCDMA smartphone competition, and higher operating expenses given Spreadtrum's aggressive roadmap will result in lower margins than our previous expectations." Spreadtrum Communications closed at $21.33 on Thursday.