Major semiconductor player Marvell (NASDAQ: MRVL) designs, develops, and markets analog, mixed-signal and digital signal processing integrated circuits, among various other products.
The company primarily serves high-growth areas such as infrastructure, data center, enterprise, automotive and industrial markets.
Why Marvell?
Marvell’s compelling portfolio of products, and its expansion, have helped the company execute its operations consistently. Currently, Marvell enjoys one of the highest revenue growth rates over the long term, among large-cap semiconductor companies.
Notably, the company expects that its serviceable addressable market (SAM) in the cloud/5G/automotive domain will expand from $10.9 billion in 2021 to $18.9 billion in 2024, witnessing a 20% CAGR.
Recently, Needham analyst Quinn Bolton, who also happens to be one of Wall Street’s top analysts — with a No. 1 ranking on TipRanks — gathered a few key points that he believes make MRVL stock a good bet.
“We estimate Marvell will organically grow revenue by (greater than) 30% in CY22 and by (approximately) 20% in CY23, the fastest growth among its large-cap peers, driven by new design wins for its 5nm platform, market share gains, and increasing supply from its major wafer foundry, substrate and assembly and test partners,” reasoned Bolton.
The analyst believes that the valuation of the MRVL stock is likely to go up as investors focus on the fastest-growing companies.
The analyst reiterated a Buy rating on the stock and raised its price target to $115 from $100.
Infrastructure Exposure, an Insulator
Bolton is particularly impressed with Marvell’s focus on the development of cloud-optimized silicon products for infrastructure markets. One of the major drivers of the company’s growth is that a large chunk of Marvell’s revenues come from infrastructure markets, which makes the company’s top line enjoy a significant buffer against “any period of semiconductor or cloud inventory digestion over the next couple of years.”
The analyst believes that a slowdown of growth rates across the semiconductor industry this year will be a blessing in disguise for Marvell, as semiconductor stock investors are likely to play safe with high secular growth rate stocks like Marvell.
The rest of the Street seems to be positive about Marvell, with a Strong Buy consensus rating, based on 22 Buys and two Holds. The Marvell stock prediction gives an average price target of $102.04, indicating 15.5% upside potential.
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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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