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Wedbush Starts Cavium Networks (CAVM) at Neutral; Set To Benefit in 2012 from Product Cycles & Enhanced Solutions Offerings

September 13, 2011 9:55 AM EDT Send to a Friend
Get Alerts CAVM Hot Sheet
Price: $44.28 -5.67%

Rating Summary:
    13 Buy, 12 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 17 | Down: 38 | New: 6
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Wedbush initiates coverage on Cavium Networks (NASDAQ: CAVM) with a Neutral. PT $35.00.

Wedbush analyst says, "Although we believe Cavium will benefit from the continued ramp of design wins in 2012 largely driven by the (1) infrastructure build-out and (2) the connected home/office markets, and is in a stronger position now that it offers a more comprehensive solution offerings with MontaVista and NEURON Search Processors, we think with the stock having rebounded 22% versus the S&P 500 (3%) since its recent low in mid-August, that relative to our universe, Cavium will likely trade in-line."

"Cavium has traded at a premium multiple since its IPO in May 2007 at an average of 37x to its next calendar year (NCY) Street EPS estimate and as high as 75x and as low as 15x. While we believe Cavium should continue to trade at a premium multiple given its position to benefit from multiple product cycles in 2012, we believe a higher multiple is not warranted due to Cavium’s slowing Y/Y earnings and revenue growth rates and the uncertain macro economic outlook."

For more ratings news on Cavium Networks click here and for the rating history of Cavium Networks click here.

Shares of Cavium Networks closed at $33.10 yesterday.




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