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Why Marvell Tapped Out

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  • Marvell Technology Group Ltd (NASDAQ: MRVL) shares are treading a downward path and have declined more than 37 percent year-to-date.
  • Pacific Crest’s Michael McConnell maintained a Sector Weight rating on the company.
  • Although the company’s mobile restructuring is expected to yield good benefits, several concern areas remain, McConnell mentioned.

Marvell Technology is a leading provider of high performance analog, mixed signal, digital processing and embedded processor technologies.

Analyst Michael McConnell believes that the combination of “strong product cycles, increasing silicon content per application and high barriers to entry should enable Marvell to continue to grow faster than its semiconductor peers when economic environment improves.”

The company has announced a significant restructuring of its mobile business and intends to focus on high profitability product lines, such as IOT, automotive and networking. The company also aims to reduce its headcount by 17 percent to lower its expenses in-line with the corporate targets.

Marvell Technology expects to incur total charges of $100-130 million as part of its restructuring initiatives.

The company expects to post mobile revenues of $122 million and gross profits of $13 million in the first half, with restructuring initiatives expected to yield annual savings of $170-220 million in operating expenses, while reducing stock based compensation by $15-20 million.

Although the mobile restructuring is a positive for Marvell Technology, “a declining HDD TAM, increasing competition in the SSD controller market, limited data center exposure and ongoing accounting issues lead us to remain on the sidelines,” McConnell mentioned.

The company’s restructuring initiatives are expected to boost the company’s F2017 non-GAAP EPS by $0.25 to $0.30.

Latest Ratings for MRVL

DateFirmActionFromTo
Mar 2021Morgan StanleyMaintainsEqual-Weight
Dec 2020Morgan StanleyMaintainsEqual-Weight
Dec 2020Morgan StanleyMaintainsEqual-Weight

View More Analyst Ratings for MRVL
View the Latest Analyst Ratings

 

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Posted-In: Michael McConnell Pacific Crest VetrAnalyst Color Reiteration Analyst Ratings

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