On Wednesday, Rosenblatt reaffirmed its confidence in Marvell Technology Group Ltd . (NASDAQ: NASDAQ:MRVL), maintaining a Buy rating and a price target of $120.
The firm's anticipation is for Marvell to surpass expectations in its upcoming earnings report for the third quarter of fiscal year 2025 and to provide a strong outlook for the following quarter. The forecast suggests that Marvell will report revenues and earnings per share that could outperform both the firm's and consensus estimates for the October and January quarters.
Marvell is scheduled to release its F3Q25 earnings on Tuesday, December 3, 2024, after the market closes. Analysts predict that the company's revenue will be propelled by robust growth in artificial intelligence (AI), particularly in data center ASICs, networking, and electro-optics. Additionally, a rebound is expected in both enterprise networking/storage and carrier infrastructure sectors.
The firm's projections for Marvell's October quarter are set at $1.45 billion in revenue and $0.40 for non-GAAP earnings per share (EPS), slightly above the consensus estimates of $1.46 billion and $0.41 EPS. For the January quarter, the firm's revenue estimate is $1.60 billion with a non-GAAP EPS of $0.51, compared to the consensus of $1.65 billion and $0.52 EPS.
Marvell has recently revised its AI sales targets for fiscal years 2025 and 2026 to $1.5 billion and $2.5 billion, respectively. Analysts believe these projections could be conservative, suggesting that the actual figures may be higher. The company's growing custom ASIC design win pipeline, which spans multiple generations, supports the view that Marvell is gaining market share in the AI total addressable market (TAM).
The positive outlook for Marvell is encapsulated in the reiterated $120 price target, which is based on a mid-30s price-to-earnings (P/E) multiple on the firm's estimated earnings per share for fiscal year 2027.
In other recent news, Marvell Technology is making headlines with a series of analyst upgrades and robust Q2 results. Susquehanna maintained a positive stance on Marvell, raising its price target to $110, driven by strong AI demand and anticipated steady performance in the upcoming earnings report. The firm also noted the potential growth in Marvell's Inphi (NASDAQ:IPHI) and custom ASIC segments.
Similarly, Oppenheimer reiterated an outperform rating on Marvell, increasing its price target to $110, citing potential growth driven by custom compute and networking/optics sectors. The firm expects Marvell's AI-related sales to exceed management's targets of $1.5 billion and $2.5 billion for calendar years 2024 and 2025, respectively.
Deutsche Bank (ETR:DBKGn) also maintained a buy rating on Marvell, keeping its price target at $90, anticipating a robust third-quarter fiscal year 2025 report driven by significant growth in artificial intelligence revenues. Despite the expected gross margin headwinds, Marvell is likely to see impressive operating margin expansion, contributing to pro forma earnings per share growth.
Loop Capital initiated coverage on Marvell, assigning a hold rating and setting a price target of $95. The firm acknowledged Marvell's strengths and the growth in its sector but expressed caution due to the company's current valuation.
Marvell reported Q2 revenues exceeding expectations at $1.27 billion, leading BofA Securities, KeyBanc, and TD Cowen to maintain positive ratings on Marvell, with raised price targets reflecting the company's strong performance. The company also plans to increase stock repurchases in the third quarter and anticipates sequential growth across all end markets.
InvestingPro Insights
Marvell Technology Group's recent performance and future prospects align with several key insights from InvestingPro. The company's stock has shown remarkable strength, with InvestingPro data revealing a 67.21% total return over the past year and a 33.72% return in the last three months. This robust performance supports Rosenblatt's bullish stance and their $120 price target.
InvestingPro Tips highlight that Marvell's net income is expected to grow this year, and analysts predict the company will be profitable, which aligns with the positive earnings outlook mentioned in the article. Additionally, the company operates with a moderate level of debt and has liquid assets exceeding short-term obligations, suggesting financial stability as it pursues growth in AI and other sectors.
It's worth noting that Marvell is currently trading at high EBITDA and revenue valuation multiples, which could be justified by its strong growth prospects in AI and other emerging technologies. For investors seeking more comprehensive analysis, InvestingPro offers 8 additional tips that could provide further insight into Marvell's financial health and market position.
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