Needham & Company Maintains a 'Buy' on Cavium Networks (CAVM); Reduces 4Q11 Guidance on Broad Based Weakness

Needham & Company maintains a 'Buy' on Cavium Networks (NASDAQ: CAVM) price target lowered from $38 to $33.

Needham analyst says, "Like many of its communication IC peers, including Altera (Nasdaq: ALTR) (Not/Rated), Xilinx (Nasdaq: XLNX) (N/R), Lattice (Nasdaq: LTCC) (N/R) and Texas Instruments (NYSE: TXN), Cavium reduced 4Q11 guidance citing weaker than expected demand across both its Enterprise/Service Provider and Broadband/Consumer segments. This broad-based demand weakness has been exacerbated by a larger than expected impact of a hub transition at Cisco (Nasdaq: CSCO) (N/R). Consistent with peer commentary that some of the weakness is attributable to inventory reduction efforts by the supply chain, Cavium believes it has under shipped end customer demand in 4Q11."

"As a result of the reduction in guidance and low visibility into end demand, we have reduced our forward estimates and 12-month price target. As we attribute the lower estimates to macroeconomic uncertainty and supply chain efforts to reduce inventory levels rather than to company specific factors, we maintain our rating." (We have reduced our 4Q11 estimates to $56.5MM/$0.11 from $61.5MM/$0.19 and our 2012 estimates to $260MM/$0.65 from $295MM/$1.15)

For an analyst ratings summary and ratings history on Cavium Networks click here. For more ratings news on Cavium Networks click here.

Shares of Cavium Networks closed at $28.48 yesterday.

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