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Marvell Beats Q2 Expectations; Street Says Buy

Marvell Technology, Inc. (MRVL), a provider of infrastructure semiconductor solutions, reported better-than-expected second-quarter results driven primarily by growth in its data center segment, which is Marvell’s largest end-market with a total revenue contribution of around 40%. Shares were down 4.3% in the pre-market trading session at the time of writing.

The company reported earnings of $0.34 per share, up 62% compared to the year-ago period, and outpaced analysts’ estimates of $0.31 per share. (See Marvell Technology stock charts on TipRanks)

To add to that, revenue climbed 48% year-over-year to $1.08 billion, marginally surpassing the Street’s estimate of $1.07 billion. The revenue growth was attributed to the continued momentum in Marvell’s fast-growing cloud infrastructure market.

Commenting on the solid quarterly results, Matt Murphy, Marvell’s President and CEO said, “I am pleased that stand-alone Marvell and the acquired Inphi businesses both contributed to our strong year-over-year revenue growth. We expect year-over-year revenue growth will accelerate in the third quarter, led by substantial contributions from the cloud data center market. In addition, we expect our 5G business to continue to grow with strong sequential revenue growth in the third quarter, and a significant step up projected in the fourth quarter.”

Marvell provided guidance for Fiscal 2022, which includes the expected results of Inphi. For the third quarter, MRVL projects revenue to be $1.145 billion (+/-3%) compared to consensus estimates of $1.15 billion. Earnings are expected to be in the range of $0.35 – $0.41 per share compared to consensus forecasts of $0.37 per share.

Impressed with Marvell’s outstanding quarterly performance, Rosenblatt Securities analyst Hans Mosesmann reiterated a Buy rating on the stock while lifting the price target to $85 (34.4% upside potential) from $70.

Mosesmann noted, “We see Marvell on the cusp of megacycles that will last for years in data center/cloud and 5G infrastructure with a portfolio of products/ IP and capabilities that we think approaches Broadcom’s infrastructure/data center capabilities.”

The analyst added, “We see Marvell’s market opportunity, secular and fundamental shifts in the world of computing due to exponential growth in AI workload requiring more custom ASIC solutions, and the accelerated move to 5nm support the notion of a premium valuation multiple.”

The analyst believes that the company is positioned for double-digit growth for multiple years ahead and stands to benefit from a multitude of product and end-market opportunities.  

Based on 20 Buys and 4 Holds, the stock commands a Strong Buy consensus rating. The average Marvell Technology price target of $67.58 implies 6.9% upside potential to current levels. Shares have gained 76.1% over the past year.

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