Jefferies said PMC-Sierra Inc.'s (NASDAQ: PMCS) cloud/storage and mobile backhaul overcome wireline weakness.

Our proprietary analysis increases our conviction that secular growth in Cloud/Storage, together with Mobile Backhaul (Wintegra) is likely to overcome potential weakness in wireline infrastructure to deliver 8 percent revenue growth in 2012, double the 4 percent growth expected for the group, says Sundeep Bajikar, an analyst at Jefferies.

Bajikar expects negative investor sentiment to reverse with two positive catalysts in the first half of 2012. He showed that PMC-Sierra's Storage revenue has outgrown Storage original equipment manufacturer (OEM) revenue since the industry trough in the first quarter of 2009, and that the company's 2011 fourth quarter guidance for Storage to decline 8 percent quarter-over-quarter conservatively accounts for an inventory adjustment.

Bajikar says his checks indicate in addition to its leadership in RAID adapters, PMC-Sierra is expanding its high-performance non-RAID offerings to serve strong demand from large new Cloud/Storage customers such as Google Inc., Amazon.com and Facebook.

He expects incremental revenues from Optical Transport Networks (OTN) to offset declines from SONET/ATM wireline infrastructure in 2012 and beyond. He also expects strong growth in Wintegra for mobile backhaul to more than offset a potential decline in T1/E1 IC.

Bajikar expects the remainder of PMC-Sierra's 6Gig Serial Attached SCSI design wins (about 50 percent) to ramp starting in the first quarter of 2012 catalyzed by the launch of Intel's Romley server in February.

Jefferies communication equipment analyst George Notter expects North American carrier capital expenditure to re-accelerate in the first half of 2012 after a pause in the second half of 2011, serving as a positive catalyst for PMC-Sierra's Wintegra business into LTE deployments.

Bajikar maintains his buy rating on shares of PMC-Sierra with a price target of $9. The brokerage also maintains its 2011 EPS estimate of $0.61 on revenue of $656.8 million, its 2012 estimate of $0.60 on revenue of $707.1 million, and its 2013 estimate of $0.73 on revenue of $800.6 million.

PMC-Sierra stock closed Tuesday's regular trading up 0.16 percent at $6.27 on the NASDAQ Stock Market.