UPDATE: Nomura Downgrades Spreadtrum Communications to Neutral on Competitive Concerns

Nomura reduced its rating on Spreadtrum Communications

from Buy to Neutral as it raised its price target from $21.50 to $21.70. Nomura commented, “We downgrade SPRD to Neutral from Buy with a new TP of USD 21.7, based on 10x 2013F EPS (multiple unchanged). We have had Buy ratings on both MediaTek and SPRD in the past five months on the view that vendors with proven chips could all benefit from the strong smartphone replacement cycle. However, we think the number of „winners‟ will narrow as the market matures. We expect MediaTek's fast-expanding product roadmap including quad core in 1H13 and connectivity chip integration in 2H13 will make it tougher for SPRD to catch up, considering the learning curve it faces for multi-cores, WCDMA and connectivity chips. Our FY12/13F EPS forecasts are in line with consensus. However, our Neutral rating is non-consensus considering the 9/4/1 spread of Buy/Neutral/Sell analyst views, per Bloomberg." Spreadtrum Communications closed at $19.21 on Thursday.