Another beat and raise for Marvell on broad-based infrastructure demand with data center being the key driver. Once again, and surprisingly, delinquencies continue to grow in the reported quarter despite increased supply execution.
Critically, despite the success in the last couple of years, Marvell greenfield, the significant design-win pipeline, has yet to hit the P&L.
Needham analyst Quinn Bolton maintained Marvell with a Buy and lowered the price target from $105 to $75 (27.2 percent upside).
Bolton wrote that F2Q23 guidance for sales beats consensus. He expected future growth driven by new product cycles and design wins.
The DC/Carrier/Auto drove much of the growth. MRVL demonstrated resiliency against supply chain headwinds and noticed a rapid tone change in the PC market.
The price target cut reflects challenging market conditions and multiple compression. MRVL remains Bolton’s top semiconductor pick as he saw significant upside potential.
Raymond James analyst Chris Caso reiterated Outperform and $80 price target (35.7 percent upside).
Enterprise networking came in slightly below expectations, with supply constraints rather than demand being the reason, leading to a strong growth forecast for the next quarter. Datacenter continues to be strong and drove the upside.
Bolton considered most of their FY23/24 revenue drivers to be driven by product cycles rather than end demand, particularly in optical networking, custom cloud silicon, switching, and automotive Ethernet.
He saw these secular drivers are primarily market independent and considered MRVL an excellent place amid the broader market uncertainty.
By Anusuya Lahiri
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