Cavium (Nasdaq:CAVM), NetLogic (Nasdaq:NETL) Raised on IP Trend

With advanced Internet Protocol (IP) networking equipment trending to the positive, Cavium (Nasdaq:CAVM) and NetLogic (Nasdaq:NETL), which powers most of it, are positioned to take advantage over the long term.

UBS (NYSE:UBS) said, "As we look to 2011, we believe current inventory rebalancing will be short-lived and industry trends with an improving macro should drive longer-term growth of advanced Internet Protocol (IP) networking equipment, which is increasingly powered by Cavium and NetLogic products. We believe the underlying secular growth drivers – the need to support more 1) speed, 2) services, 3) subscribers, 4) security – are well intact, and thus we reaffirm our above consensus estimates for Buy-rated NetLogic and raise our estimates for Neutral-rated Cavium from 2H11."

Sales estimates for Cavium in 2011/12 were raised by 1%/3% to $279 million/$353 million and non-GAAP EPS by 2%/4% to $1.18/$1.57.

Cavium closed Thursday at $37.11, up $0.60, or 1.64 percent. UBS has a price target on them of $38.50. NetLogic closed at $32.42, up $0.04, or 0.12 percent. UBS has a price target on them of $37.50.