Skip to main content

Market Overview

Marvell Looks Overvalued, So Citi Keeps Sell Rating On Stock

Share:
Marvell Looks Overvalued, So Citi Keeps Sell Rating On Stock

Although there’s a rebound in the storage business, shares of Marvell Technology Group Ltd. (NASDAQ: MRVL) appear overvalued following the recent run-up, Citi’s Atif Malik said in a report. He maintained a Sell rating on the company, while raising the price target from $8.65 to $10.50.

Marvell reported its April quarter revenue and adj. EPS at $540.8M and $0.01, missing the Citi estimates of $565M and $0.09 and Street’s $575M and $0.07, respectively. The company guided to July quarter revenue and adj. EPS at $630M and $0.11, both ahead of the Street expectations of $587M and $0.09, respectively.

Shares Up, But Continued Concerns

Marvell’s shares climbed 7 percent after the company announced its July quarter revenue guidance significantly ahead of Street expectations on HDD inventory restocking. Analyst Atif Malik mentioned that Marvell’s operating margins in the April quarter and in the July quarter guide were lower than expected, despite the company restructuring its mobile business and generating better-than-expected gross margins.

Related Link: Marvell Results Strong Under New Management, Says Brean

Malik stated that there were three reasons for the Sell rating:

  1. The shares already seem to reflect a “significant recovery in improved profitability on mobile exit and restructuring.”
  2. Concerns over the long-term core storage business outlook in a declining HDD market, with Marvell losing share in both SSD and HDDs
  3. Since the ex-CEO continues to be on the company board, investors may not “give new management team a clean slate.”

The analyst believes Marvell would be “an interesting acquisition target on FCF generation,” with potential buyers as private equity, US smartphone exposed semiconductor peers, or a Chinese company, provided the new CEO is able to turn around the core storage business.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for MRVL

DateFirmActionFromTo
Mar 2022SusquehannaMaintainsPositive
Mar 2022Summit Insights GroupDowngradesBuyHold
Mar 2022Morgan StanleyMaintainsEqual-Weight

View More Analyst Ratings for MRVL

View the Latest Analyst Ratings

 

Related Articles (MRVL)

View Comments and Join the Discussion!

Posted-In: Atif Malik CitiAnalyst Color Short Ideas Price Target Reiteration Analyst Ratings Trading Ideas Best of Benzinga

Latest Ratings

StockFirmActionPT
SEDGB of A SecuritiesMaintains411.0
PTLOPiper SandlerMaintains28.0
AOUTLake StreetMaintains26.0
RAPTPiper SandlerMaintains52.0
OCXLake StreetMaintains6.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com