Feb. 1 (Bloomberg) -- Cavium Inc., a maker of chips for communications and security applications, rose the most in three months after fourth-quarter profit and sales beat analyst estimates.
Cavium advanced 6 percent to $35.46 at the close in New York for its biggest gain since Oct. 31. The stock has climbed 10 percent over the past 12 months, compared with a 6.7 percent gain in the Russell 2000 Technology Index.
As companies collect and analyze more data to run their businesses, equipment manufacturers are building systems that remotely handle computing tasks and deliver information securely, requiring speedy chips that can handle jobs with built-in software. San Jose, California-based Cavium sold more of such semiconductors to Palo Alto Networks Inc. and Citrix Systems Inc., making up for fewer orders from Cisco Systems Inc. according to Alex Gauna, an analyst at JMP Securities LLC.
“You’re seeing somewhat of a relief rally,” Gauna said in an interview. “It now has a more broad, diversified customer base.”
Gauna rates Cavium the equivalent of a buy at market outperform, with a target of $38.
Fourth-quarter profit, excluding some costs, was 20 cents a share, the company said in a statement yesterday. That compares with an average analyst estimate of 17 cents. Revenue rose 18 percent to $66.4 million, while analysts had projected $66.1 million.
Cavium’s multicore processor will help drive sales in the future, Gauna said, as the cloud-computing industry grows.
“That’s where the market is going,” he said.
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