Shares of Sigma Designs fell sharply Wednesday after an analyst cut his rating on the stock.

American Technology Research analyst Jeff Schreiner, who downgraded the stock to ‘neutral’ from ‘buy,’ believes that positive developments within internet-TV and strong forecasted growth have already been captured.

In our opinion current price levels have given SIGM credit for its substantial growth

and earnings acceleration during CY06, and forecasted growth in CY07, Jeff Schreiner, analyst at American Tech.

In a note to clients, Schreiner said accelerating competitive threats, increased research spending, and tax issues for 2008 present risks to the firm's outlook.

The analyst also lowered his price target from $34 to $28.

Shares of the company, which produces microchips to decode audio and video, as well Internet video lost $3.28, or 10.80 percent to $27.08 in late afternoon trading on the Nasdaq Stock Market.