Marvell Technology Surges Although Everyone Expects Worst Quarter In Years

Shares of Marvell Technology Group Ltd. MRVL rose about 1.5 percent on Thursday morning, in anticipation of the announcement of the company’s first quarter (fiscal 2016) financial results after the market close. However, the company, the crowd and the Street all anticipate the worst quarter in years in terms of earnings.

In the first quarter of fiscal 2015, the company reported earnings of $0.27 per share on revenue of $957.83 million. For the current quarter, management guided earnings of $0.18 per share on revenue of $725 million. The crowd is less confident on the results, and projects earnings of $0.14 per share on revenue of $734.12 million. Nonetheless, Wall Street analysts are the most bearish, modeling earnings of $0.12 per share on revenue of $727.25 million.

Related Link: Almost-Flat Earnings Expected At Hewlett-Packard

It should be noted that, neither the Street nor the crowd were always as bearish. Nevertheless, their expectations have been falling consistently as earnings loomed. Consensus estimates now stand at their lowest.

Further Comments

In a recent note, analysts at Susquehanna commented on semiconductor stocks, including Marvell. According to the experts, “a spinout would remove the justification for assigning MRVL a discounted multiple relative to peers. Going forward, since we got a reset on the core business (and the stock barely reacted), and with the potential for a strategic alternative for the handset business, we think the stock's risk/reward is quite attractive.”

Related Link: Jim Strugger's Options Strategy For Marvell Technology Pre-Earnings

In addition, RBC Capital Markets recently included the stock in its “U.S. Equities Top Picks List” for the month of May.