CLSA Initiates On Cavium, Says Well Positioned To Gain Share After Competitor M&A Activity

In a report published Tuesday, CLSA analyst Srini Pajjuri initiated coverage of

with an Outperform rating and price target of $85. The analyst believes that the company would continue to benefit sustainable secular growth in the mobile data, cloud and security markets. "In addition, the company's addressable market is on track to double from new products in Ethernet switch and ARM server markets," Pajjuri said. The analyst believes that the company is especially well positioned to gain market share in these categories following its recent M&A activity, which involved its major competitors. While the stock valuation is not cheap, the analyst believes that it is justified, since Cavium is expected to post 28 percent EPS CAGR going forward.