UPDATE: FBR Capital Markets Initiates Coverage on Cavium with Outperform Rating, $65 PT on Solid Core Business

In a report published Friday, FBR Capital Markets analyst Christopher Rolland initiated coverage on

with an Outperform rating and $65.00 price target. In the report, FBR Capital Markets noted, “Cavium, Inc.'s heritage in extreme multi-core processing architectures and large library of hardware accelerators provide a strong value proposition for the company's growing product portfolio. Additionally, the 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. When these are matched with substantial operating leverage and a lower maintenance R&D investment, we believe the shares warrant a substantial valuation multiple of approximately 35x 2015E earnings (the historical median of the last few years).” Cavium closed on Thursday at $57.32.