Marvell Prospects Affected By Loss Of Huawei Revenue, BMO Says

Marvell Technology Group Ltd. MRVL reported its first-quarter results and announced second-quarter guidance broadly in line with expectations. Going forward, the company’s results will be impacted by Huawei ceasing to be a customer, according to BMO Capital Markets.

The Analyst

BMO Capital Markets’ Ambrish Srivastava maintained an Outperform rating on Marvell, with an unchanged price target of $28.

The Thesis

Marvell reported first-quarter revenues at $662 million, representing an 11-percent decline versus Street expectations of a 13-percent downturn. EPS came in at 16 cents versus expectation of 14 cents, Srivastava said.

The company guided second-quarter revenue and EPS of $650 million and 15 cents, slightly short of the consensus estimates of $698 million and 20 cents, respectively. The guidance reflects the termination of shipments to Huawei.

The Storage segment, which accounts for 42 percent of total revenues, performed better than expected. Storage revenues declined sequentially by 12 percent, better than BMO’s estimate of 16 percent, Srivastava said.

Marvell indicated most of its products were impacted by tight inventory control by customers and continued macroeconomic headwinds. The company also mentioned two new design wins that could add another $500 in content per 5G base station.

Price Action

Shares of Marvell traded around $22.26 at time of publication Friday.