Marvell Techology Group Ltd. MRVL shares are attractive at today's levels and poised to benefit from growth trends in the data sector, according to Evercore ISI.
Evercore ISI analyst C.J. Muse initiated coverage of Marvell with an Outperform rating and $27 price target.
The increasing importance of AI, big data and storage is making data worth more and creating a virtuous cycle that generates an increasing demand for higher semiconductor content led by data center and cloud computing, Muse said. Marvell is a direct beneficiary of these trends, he said.
“Said simple, Marvell’s strength lies in alleviating bandwidth constraints in storing, moving and accessing increasingly valuable data at increasingly higher speeds."
Storage is a better segment than investors thin, and its growth trajectory is often underestimated, said Muse, who forecast an 8.5-percent CAGR for Marvell's storage business.
The investor focus is on whether the $6.35-billion merger with Cavium Inc CAVM closes by July, Muse said.
“We continue to expect the transaction to go through, but obviously this is a source of near-term volatility. From a purely fundamental perspective, Cavium and Marvell’s product portfolios are especially complementary for the data center, with virtually no product overlap," the analyst said.
The merger supports $2 in EPS into calendar 2020, Muse said.
Marvell shares were up 1.05 percent at $20.12 at the close Wednesday.
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