Wunderlich Securities Downgrades Cavium to Sell, Lowers Target to $23

Wunderlich Securities lowers its rating on Cavium CAVM to Sell from Hold and lowers its price target to $25 from $23 a share on headwinds, valuation and expectation concerns. Wunderlich Securities says, "We are downgrading shares of Cavium, Inc. (CAVM) to Sell from a Hold rating given what we believe are overly optimistic expectations for future growth, competitive headwinds, and current valuation of 6.4 EV/2012E sales that appears unsustainable and difficult to justify. We are lowering our 2012 estimates to be more in line with the Street and we expect the company to continue to face competitive pressures in the Enterprise/Service Provider segment (~65% of sales), challenges meeting expected ramps in the Broadband/Consumer segment (~23% of sales), with the Software business expected to remain stagnant or decline." CAVM closed at $34.83 a share on Monday.