Integrated circuit developer Marvell Technology’s (MRVL) cloud-optimized silicon brings computing power, networking, storage, and security under one umbrella. The company is set to announce its third-quarter fiscal 2022 (FQ3) results today, after market close.
Analyst Weighs In
Ahead of the print, Susquehanna analyst Christopher Rolland looked into the company’s developments and drew some insights into how the Q3 could have been. He found it difficult to predict the performance of each segment because of the recent integrations of the acquired assets of Inphi, Avera, Aquantia, and Innovium.
Nonetheless, continued momentum in Enterprise, Cloud, Gaming, and 5G is expected to have provided an upside to the quarterly performance.
Moreover, strong demand at Samsung and Nokia (NOK) is expected to have been a positive driver. Additionally, the declining share of Huawei in the global 5G market spells good news for Marvell, which serves Huawei competitors Samsung, Nokia, and Ericsson (ERIC).
Rolland was upbeat about the near-term outlook of the company. “Looking forward, we expect Marvell’s 5nm OCTEON 10 DPUs to help sustain data center momentum through 2H and beyond,” he weighed in.
Overhangs Loom Large
Importantly, Rolland observed that worse-than-expected results of Western Digital, a key end customer of Marvell, are expected to have been an overhang on Marvell’s top line. However, another major end customer, Seagate, delivered solid quarterly results this earnings season, which is likely to have partially offset, if not balanced out, the impact from Western Digital.
Then again, weakness in the general PC market and historically conservative Street expectations for the fourth quarter pose as other weak points for the upcoming print.
Additionally, supply disruptions, which have crippled the chip market for some time now, still remain an overhang in the area of Networking. However, Rolland expects Marvell to have “secured enough wafers to at least meet the guide.”
The analyst reiterated a Buy rating on the stock, and raised the price target to $82 from $75. “Overall, we remain strong believers in the long-term growth story,” said Rolland.
Wall Street’s Take
The Wall Street analyst consensus is also quite optimistic about the company, with a Strong Buy rating based on 16 Buys and 6 Holds. The average Marvell price target of $82.28 indicates an upside potential of 15.97%.
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Disclosure: At the time of publication, Chandrima Sanyal did not have a position in any of the securities mentioned in this article.
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