Cavium Networks Gets Downgraded by Deutsche Bank
Friday, September 23, 2021 1:17 PM

Analysts at Deutsche Bank downgraded the rating of Cavium Networks, Inc. (Nasdaq: CAVM) to Hold with a revised price target of $30, down from $37. They believe that the stock’s fiscal 2011 third quarter is expected to be 4 percent to 6 percent lower compared to its second quarter, due to weaker than expected revenues from enterprise and software customers.


DB analysts state that in the near-term, they are concerned about demand trends and inventory draw-downs with enterprise and carrier customers. They add that in longer-term they see the potential for growth acceleration in second half of FY2012, based on multiple new product cycle ramps. They state that the company’s management noted weaker than expected revenues from Cavium’s enterprise customers as well as recognized software and services revenues. They state that although the company is well-positioned in merchant silicon, they are cautious on near-term moderation in Cavium’s growth due to macro-driven weakness in both the enterprise and carrier segments. They add that end-market weakness has potential to create volatility in the take rate of Cavium’s parts by Tier-1 equipment vendors like Alcatel Lucent, Siemens and Nokia, and influence systems vendors to maintain lean component inventories. They state that risks involving Cavium include volatility in carrier and enterprise IT spending and competition from rivals like Freescale and Intel.


On a year-to-date basis, Cavium has a share performance of -2.42 percent, and as compared to Standard & Poor’s 500, it has an YTD share performance of 0.93 percent.


Cavium Networks designs, develops, and markets semiconductor processors for intelligent and secure networks. It has a total market capitalization of $1.79 billion with a P/E ratio of 53.290. It has more than 48 million outstanding shares.


Shares of Cavium Networks fell 5.48 percent or $1.71 to trade at $29.50.