UPDATE: Nomura Upgrades Cavium Following 1Q14 Results

Nomura analyst Sanjay Chaurasia on Thursday upgraded Cavium (NASDAQ: CAVM) from Reduce to Neutral and raised the price target from $32.00 to $40.00 following the company's first quarter results.Summary of First Quarter 2014 ResultsThe company reported first quarter non-GAAP net income of $17 million, or $0.30, versus the estimated $0.28. Earnings per share were up 58 percent from the same quarter last year. Revenue came in at $83.2 million versus the $81.63 million estimate.Non-GAAP gross profit came in $54.417 million, up from the fourth quarter's gross profit of $53.825 million. The company reported $17.239 million in non-GAAP income from operations. Cavium had $124.106 million in cash and cash equivalents as on March 31, 2014.Nomura Upgrades CaviumNomura upgraded shares of Cavium, emphasizing the company's better traction in Liquid IO.Chaurasia wrote, "We are revising our prior thesis that the company's traction from new products may fall short of expectations and that the core growth may not support St. ests. While Liquid IO was not part of our original thesis and we estimate that the company's core revenue is growing at 8-10%, we think Liquid IO is gaining larger acceptance than we had expected." The analyst added that he is more optimistic on the company's ARM server chips. Chaurasia noted that Cavium may have a different approach in the ARM server market than its competitors. Shares of Cavium closed at $42.37 and are currently trading at $45.78, up 8.05 percent.