GigaMedia up after analyst starts coverage with "Buy" rating

Shares of Taiwan-based GigaMedia, which develops and licenses online gaming software and runs an online gaming portal, rose 42 cents, or 2.8 percent, to $15.24. In the past year, the stock has traded between $9.02 and $25.42.

In a client note, Brean Murray analyst Andrey Glukhov said he thinks the company can see this growth year over year, as well as 30 percent growth in fiscal 2009, without having to sacrifice its operating margin.

"While the company stepped up marketing in (the second half of 2007), which fueled concerns about margin sustainability, we believe these concerns are inflated, as about half of the company's marketing spending is discretionary and can be tweaked to protect margins," he said.

Glukhov thinks growth can come from GigaMedia's online poker Web site, Everest Poker, which is targeted mainly at non-English-speaking European countries, and its growing online games business, through which it runs several casual games in Hong Kong, Taiwan and China.

The company has also gotten licenses to run some "significant" massively multiplayer online role-playing games in Southeast Asia, he said.

This makes Glukhov "optimistic it can leverage that success to start obtaining licenses for mainland China, which would open to the company a highly attractive, fast-growing market."

The analyst set a $22 price target for the stock and said its shares are attractively valued, in part because they have declined about 20 percent since the start of the year.