Analyst Reactions To Cavium's Q4 Earnings

Cavium Inc CAVM reported Q4 earnings results Wednesday that were slightly above expectations.

Following the results, JMP Securities downgraded that stock from Market Outperform to Market Perform.

Analyst Alex Gauna commented that the stock “fell short of living up to the outperformance CAVM enjoyed coming into the call, and as such, we are moving to the sidelines given that we did not see enough in the report to justify further material upside to the almost 2x premium it is currently trading at relative to our coverage universe mean.”

FBR & Co. analyst Christopher Rolland took a different view and maintained an Outperform rating and raised the firm’s price target from $65 to $68.

Rolland commented that he believed “the shares warrant a substantial valuation multiple of approximately 36x next year’s earnings...lofty but appropriate, in our opinion, given the company’s growth and margin profiles.”

Rolland also felt that "the company’s innovative design team, solid pipeline of new products, and ability to increasingly tap into a fast-growing hyperscale customer base should provide a solid backdrop of growth for the next few years."

Wedbush was also bullish on the stock and reiterated its Outperform rating and $67 price target.

Analyst Betsy Van Hees stated that “with yet another solid beat and raise in a seasonally tough quarter, we remain solidly impressed with CAVM’s execution and have an increased level of confidence in CAVM’s new product pipeline and considerable design win momentum to drive growth in 2015.”

Shares of Cavium opened Thursday at $61.00, up 2.13 percent.