On Friday, Marvell (NASDAQ:MRVL) Technology Group Ltd. (NASDAQ:MRVL) retained its Strong Buy rating and $94.00 price target from CFRA, despite reporting a decrease in sales for the April quarter. The semiconductor company's earnings per share (EPS) of $0.24 matched consensus estimates, but showed a decline from the $0.31 reported in the same quarter of the previous year. The drop in sales by 12% was nearly in line with expectations, despite significant growth in the data center segment.
The company's robust performance in data centers, which saw an 87% increase, was overshadowed by downturns in other segments. Consumer sales plummeted by 70%, carrier infrastructure by 75%, enterprise networking by 58%, and auto and industrial sectors by 13%. CFRA has revised its EPS forecast for fiscal year 2025 to $1.50 from $1.82 and for fiscal year 2026 to $2.50 from $2.70, taking into account these sectoral performances.
Marvell's guidance for the July quarter suggests an 8% sequential increase, which aligns with CFRA's expectations that the cyclical business declines have largely concluded. The analyst firm anticipates that the worst phase of customer inventory adjustments is now behind the company. Looking forward, Marvell is expected to enter a phase of elevated growth, propelled by its strong pipeline in custom AI silicon, despite the lower margins in this area, and its optics business.
CFRA's outlook is optimistic for the second half of the year and into calendar year 2025, driven by a recovery in non-data center markets. Sales in enterprise networking, carrier, and automotive sectors are expected to bounce back from a low base, contributing to the company's growth trajectory. The firm's valuation of Marvell is based on a price-to-earnings (P/E) ratio of 37.6 times their calendar year 2025 EPS estimate, which is above peer averages, reflecting confidence in the company's fundamental prospects.
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