Auriga Maintains a 'Buy' on Cavium Networks (CAVM); Reducing Target as CSCO/Enterprise Correction Leads to Lowered Guidance

Auriga maintains a 'Buy' on Cavium Networks (NASDAQ: CAVM) price target lowered from $48 to $37.

Auriga analyst says, "We maintain our rating, but reduce our price target as the company reduced its guidance for 3Q11 citing larger than expected impact from hub arrangement transition at Cisco (Nasdaq: CSCO)(Buy) and inventory correction at other enterprise customers. While we bring down our estimates for CY11 and CY12 to account for weaker macro trends, we continue to expect CAVM to show 20%+ growth in 2012 on new product launches even if end markets remain flattish. Our analysis continues to show CAVM as the clear market leader in fast growing multi-core processor segment for new design wins, which should lead to 20%-25% top-line CAGR over the next five years. We would use recent weakness to aggressively build positions for long-term gains."

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 $31.21 yesterday.

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