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Marvell Delivers Q1 Beat; Street Sees 54% Upside

Story Highlights

Marvell shares are ticking higher after robust first-quarter numbers. Gains across major end markets and a positive stance by Wall Street indicate further gains may be in the offing.

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Shares of Marvell Technology, Inc. (MRVL) rose about 3.5% during after-hours trading on Thursday and were up a further 4% during the pre-market session today, after the infrastructure semiconductor solutions provider reported better-than-expected first-quarter numbers.

Revenue jumped 74.2% year-over-year to $1.45 billion, outperforming estimates by $20 million. Earnings per share of $0.52 beat consensus by $0.01. Notably, the company generated $194.8 million in cash flow from operations during this period.

Significantly, the contribution of the Data Center end market to total revenue has increased to 44% from 33% for the year-ago period. Contributions from the company’s next two biggest end markets—Carrier Infrastructure and Enterprise Networking—were 18% and 20% versus 20% and 21%, respectively, for the comparable year-ago period.

These numbers signify an expansion in revenue from the Data Center vertical, where revenue jumped 131% year-over-year. While the percentage contribution from the next two verticals may have decreased, both Carrier Infrastructure and Enterprise Networking vertical revenues also jumped over 50% as compared to the year-ago period.

Management Weighs In

Marvell President and CEO Matt Murphy said, “Revenue exceeded the midpoint of guidance, driven by higher-than-forecasted results from the datacenter end market. Our new product ramps and growth in content have been instrumental in driving strong revenue growth. With 88% of our overall revenue derived from data infrastructure, we are confident that our unique secular growth drivers in the cloud, 5G, and auto, will continue to help drive sustainable long-term growth.”

Looking ahead to the second quarter, Marvell sees revenue at $1.51 billion (+/-3%) with non-GAAP diluted income per share at $0.56 (+/-$0.03). Additionally, the non-GAAP gross margin is expected to hover between 65% and 65.5%.

Analyst’s Take

Rosenblatt Securities analyst Hans Mosesmann has reiterated a Buy rating on the stock alongside a price target of $125.

Overall, the Street has a Strong Buy Consensus rating on Marvell based on 14 Buys and three Holds. At the time of writing, the average Marvell price target was $88.13, which implies a potential upside of 54.64%. That’s after a 36% slide in share prices so far in 2022.

Closing Note

This robust Q1 showing comes despite supply chain challenges. Gains across the top three end markets are a further positive for the stock. The expected 54% upside by the Street only makes the stock even more attractive at current levels.

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