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3 Reasons Marvell Will Return To Top-Line Growth

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3 Reasons Marvell Will Return To Top-Line Growth

Following an “upbeat” meeting with chief financial officer Jean Hy and director of investor relations John Ahn of Marvell Technology Group Ltd. (NASDAQ: MRVL), Loop Capital’s Betsy Van Hees believes the target for opex reduction of $180 million–$220 million was “just the low hanging fruit.”

Van Hees reiterated a Buy rating on the company, with a price target of $18.

Achievable Target

The analyst also believes that following “the reset from the divesting of $100 million of revenue from non-strategic businesses, MRVL will return to top line growth benefiting from its positioning in storage, networking, and connectivity.”

Marvell Technology intends to discontinue some of its R&D programs, while streamlining engineering processes, consolidating R&D sites to achieve greater efficiency and reduce legal and accounting costs.

The company expects to complete these actions by FQ3 2018, and management indicated that this would be the first step in streamlining operations.

Return To Top-Line Growth

Marvell Technology also expects to return to revenue growth, driven by market share gains in the HDD and SSD markets, networking and its connectivity solutions, given that the company is one of the three suppliers with the broadest product offerings.

Marvel Technology “views its strong balance sheet as another level to the model where MRVL can potentially be a consolidator delivering shareholder value in storage and networking and returning cash to shareholders with its dividend and stock buy-back,” Van Hees stated.

The company intends to buyback shares worth about $500 million over the next 12 months.

Image Credit: By Solomon203 - Own work, CC BY-SA 4.0, Wikimedia Commons

Latest Ratings for MRVL

DateFirmActionFromTo
Dec 2020Morgan StanleyMaintainsEqual-Weight
Dec 2020Morgan StanleyMaintainsEqual-Weight
Oct 2020Craig-HallumUpgradesHoldBuy

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