UPDATE 1-Jefferies raises China TechFaith to "buy", shares up

(Recasts; adds analyst comments, background)

Nov 16 (Reuters) - Shares of China TechFaith Wireless Communication Technology Limited (CNTF.O) rose more than 10 percent on Friday after Jefferies & Co raised its rating on the company's stock, citing attractive valuation.

Analyst Brian White raised his rating to "buy" from "hold" on the Beijing-based mobile phone design provider's stock, which has fallen about 23 percent in the last two days despite the company reporting better-than-expected third-quarter results on Nov. 13.

"We find the stock inexpensive at current levels," White said in a note to clients, maintaining his price target of $8.65.

At Thursday's closing price of $6.04, China TechFaith's shares trade at 12.6 times the brokerage's 2008 pro-forma earnings-per-share estimate of 48 cents a share.

The company swung to profitability in the third quarter, earning 4 cents per American depositary share, surprising analysts who had expected a loss of 1 cent a share. White said the turnaround was due to a new product cycle of feature phones and smartphones, and an improved cost structure.

The analyst projects 74 percent sales growth in 2007 and 54 percent in 2008.

Shares of the company were trading up 52 cents at $6.56 in morning trade on the Nasdaq after rising as much as $6.74. They had lost 44 percent this year before Friday's gains. (Reporting by Mehul Shah in Bangalore; Editing by Pratish Narayanan)