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Avago shares up on strong quarter and forecast

The Associated Press

Avago Technologies Ltd. shares rose Wednesday after the chipmaker reported a better-than-expected fiscal third quarter and gave a solid revenue forecast for its current quarter.

THE SPARK: Avago said Tuesday that it earned 74 cents per share for the quarter on an adjusted basis, up from 72 cents per share last year. Its revenue increased to $644 million from $606 million. The quarter's results beat analyst expectations of 68 cents per share on revenue of $621.3 million, according to FactSet.

Avago also said that it expects its revenue for the fourth quarter will jump by 12 to 15 percent over the prior year.

Based on its 2012 fourth-quarter revenue of $618 million, its forecast suggests revenue of $692.2 million to $710.7 million. Analysts were expecting $697.7 million.

THE BIG PICTURE: The company, based in Signapore, sells analog semiconductor devices and targets wireless communications, wired infrastructure and industrial markets.

THE ANALYSIS: Sterne Agee analyst Vijay Rakesh reiterated a "Buy" rating on the company's stock and raised the price target to $46 from $44 on the anticipated strength for the current quarter, despite tough competition.

SHARE ACTION: Shares jumped $1.96, more than 5 percent, to $38.51 by late afternoon, outpacing broader market gains. Its stock is trading at the upper end of its 52-week trading range of $30.50 to $39.74.