Piper Jaffray Reiterates Underweight Rating For Cavium Networks (CAVM)

Piper Jaffray is out with a new report that is pessimistic on Cavium Networks' (NASDAQ: CAVM) revenue outlook.

The report states, “We believe CAVM is skipping the 40nm/45nm generation in network processors, hurting its competitive position. Moreover, we believe the company is late with its 65nm 32 core OCTEON product. In our view, this will likely slow the company's communications revenue growth in 2012.” Furthermore, Piper Jaffray notes that Cavium is pushing into the consumer market to grow revenue.

“To grow revenue, the company is pushing into the consumer market. However, to date the company has not been able to demonstrate that it will attain revenue growth in the consumer market. To offset shortfalls in consumer revenue, CAVM keeps acquiring companies. We think the strategic direction will culminate in a slowing of earnings growth in 2012.”

Piper Jaffray reiterated its Underweight rating and Price Target of $32.50.

Cavium Networks closed at $42.82 on Wednesday's close.