Shares of Cavium (NASDAQ:CAVM) were down Wednesday morning after the chipmaker lowered its revenue outlook late on Tuesday and faced a series of downgrades.
The company said it expects fourth-quarter revenue to be in the range of $56 million to $57 million, which is below average analyst estimates in a Thomson Reuters poll of $61.1 million.
The San Jose, Calif.-based company cited weaker-than-expected revenues across both the enterprise and service provider as well as the broadband and consumer market segments, further exasperated by a larger-than-expected impact of a hub transition at one of its major customers.
Cavium believes it under-shipped to customers in the fourth quarter. It sees gross margin during the period down about one percentage point from its previous guidance on lower sales volume.
The narrowed forecast caused several brokerage firms to lower their forecast on Cavium, with Piper Jaffray cutting the company’s price target to $16 from $23 and slapping it with an underweight rating.
Needham cut Cavium's price target to $33 from $38, Wedbush reduced it to $24 from $27 and Stifel lowered its price target to $33 from $35.
While Cavium was down more than 7% premarket on Wednesday, it has since retracted some of those losses and was recently off just 1%.