Will This Price Target Increase Have A Positive Impact On Cavium (CAVM) Stock On Tuesday?

NEW YORK (TheStreet) -- The price target on Cavium Inc.  (CAVM) stock was increased to $65 from $45 by analyst at Barclays (BCS) on Tuesday.

The firm said it upped its numbers on the company, which designs, develops, and markets semiconductor processors for intelligent and secure networks, based on an upside to earnings as well as new products driving topline.

Barclays maintained its "overweight" rating on Cavium.

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Separately, TheStreet Ratings team rates CAVIUM INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate CAVIUM INC (CAVM) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including premium valuation and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 4.1%. Since the same quarter one year prior, revenues rose by 19.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CAVM's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.51, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for CAVIUM INC is currently very high, coming in at 72.97%. Regardless of CAVM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CAVM's net profit margin of 2.81% is significantly lower than the industry average.
  • Net operating cash flow has significantly decreased to -$0.87 million or 110.30% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: CAVM Ratings Report
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