Brean: Marvell Still A Buy On 'Upside Scenarios'

In a report published Monday, analyst Mike Burton of Brean Capital maintained his Buy rating on

. The price target has been lowered from $17 to $16. The company has announced disappointing preliminary results for the April quarter. Marvel now expects to report April quarter revenues in the range of $710 million - $740 million due to the weakness in its Emerging Markets and PC segments. This is significantly below the previous guidance of $810 million to $830 million. "We believe investors had already adjusted expectations below the Street following results from Seagate, guidance from Hutchinson, and the share-loss from Sandisk," the analyst said.

had indicated that the PC markets were soft, while expecting a decline of 10 percent quarter on quarter in its HDD TAM segment.

, on the other hand, has guided to a decline of 12 percent in its shipments for the quarter.

, which is Marvell's largest SSD controller customer, recently lost its contract with

, which has had a significant adverse impact on Sandisk's guidance. "We believe the China handset market explains the downside, as Marvell is still somewhat exposed to weak 3G, and LTE was not as strong as expected in Q1," according to Brean Capital. The analysts expects two primary catalysts to boost the company's performance going forward. The first is Marvel's exploring of options for its baseband business, while the second could be a favorable outcome for the CMU case, which is expected in early Autumn. "There is greater than 50% chance that MRVL "exits" the mobile business (at least MRVL's P&L does), and CMU damages get reduced," according to Brean Capital. "While Marvell is one of the only companies to successfully launch a single-chip 4G LTE solution, we expect Mobile sales to decline for the 4th consecutive quarter," analyst Burton added.