DA Davidson Cuts Price Target on Cavium Networks (CAVM), Market Will Only Become More Competitive
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Price: $86.23 --0%
Rating Summary:
13 Buy, 18 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
Rating Summary:
13 Buy, 18 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
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DA Davidson is maintaining its Neutral rating on shares of Cavium Networks (NASDAQ: CAVM) while reducing its price target from $30 to $26.
The company pre-released its quarterly results with sales expectations missing the company's prior guidance. Sales are now expected to fall 16 percent Q/Q, down from its previous estimate of a loss of 8-10 percent Q/Q. Gross margin is still forecasted to fall by 1 percent.
Management claimed the weaker than expected results reflects continued weakness in both of the company's Enterprise and Service Provider segment and its Broadband and Consumer segments.
The firm notes the market is only going to be more competitive in the future as Freescale (NYSE: FSL) tries to gain back market share and the merger of Broadcom (Nasdaq: BRCM) and NetLogic (Nasdaq: NETL). CAVM's new product lines, NEURON and OCTEON II, have been experiencing slow growth overall.
An analyst at DA Davidson comments, "Cavium had expected Q4 to mark the bottom at the time they gave original guidance. The company now believes it is under-shipping end-market demand. While this is similar to what other companies have said thus far this quarter, we believe there will not be a true resumption in orders until 2H’12 when India and China are expected to resume their wireless and wireline capital expenditures. With regard to the Cisco hub transition, we believe that should be behind the company but end-market demand in enterprise will remain weak through Q1’12."
DA Davidson has cut its Q4 and FY11 EPS estimates from $0.19 and $1.12 to $0.11 and $1.04. The firm also lowered its sales estimates for Q4 and FY11 to $56.4 million and $259.3 million.
For FY12, the firm reduced its EPS and sales estimates from $1.05 and $277.7 million to $0.90 and $257.2 million.
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.
The company pre-released its quarterly results with sales expectations missing the company's prior guidance. Sales are now expected to fall 16 percent Q/Q, down from its previous estimate of a loss of 8-10 percent Q/Q. Gross margin is still forecasted to fall by 1 percent.
Management claimed the weaker than expected results reflects continued weakness in both of the company's Enterprise and Service Provider segment and its Broadband and Consumer segments.
The firm notes the market is only going to be more competitive in the future as Freescale (NYSE: FSL) tries to gain back market share and the merger of Broadcom (Nasdaq: BRCM) and NetLogic (Nasdaq: NETL). CAVM's new product lines, NEURON and OCTEON II, have been experiencing slow growth overall.
An analyst at DA Davidson comments, "Cavium had expected Q4 to mark the bottom at the time they gave original guidance. The company now believes it is under-shipping end-market demand. While this is similar to what other companies have said thus far this quarter, we believe there will not be a true resumption in orders until 2H’12 when India and China are expected to resume their wireless and wireline capital expenditures. With regard to the Cisco hub transition, we believe that should be behind the company but end-market demand in enterprise will remain weak through Q1’12."
DA Davidson has cut its Q4 and FY11 EPS estimates from $0.19 and $1.12 to $0.11 and $1.04. The firm also lowered its sales estimates for Q4 and FY11 to $56.4 million and $259.3 million.
For FY12, the firm reduced its EPS and sales estimates from $1.05 and $277.7 million to $0.90 and $257.2 million.
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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