Marvell Technology's Shortfall Drivers Are A Concern: 5 Analysts Offer Takes On FQ3 Print

Marvell Technology Inc’s MRVL shares tumbled in after-hours session on Thursday, following the company’s worse-than-feared earnings release.

Benchmark Analyst Cody Acree reiterated a Buy rating and a price target of $70.
Needham analyst Quinn Bolton maintained a Buy rating, while reducing the price target from $64 to $50.
Rosenblatt Securities analyst Hans Mosesmann maintained a Buy rating and a price target of $125.
KeyBanc analyst John Vinh reaffirmed an Overweight rating, while lowering the price target from $75 to $65.
Raymond James analyst Melissa Fairbanks reiterated an Outperform rating, while reducing the price target from $80 to $60.

Benchmark

“While Marvell’s Q3 results were initially expected to be weighed on by weaker demand for on-premise Enterprise Networking equipment, and ongoing demand issues in China, its Q3 revenue came in towards the lower end of its guidance range at $1.54 billion and in-line with the consensus,” Acree said in a note.
“Marvell is forecasting a sequential decline in its Q4 to $1.4 billion, or $200 million shy of the Street as late in Q3 customers started requesting shipment push-outs and the rescheduling of orders to manage their inventory in a changing demand environment,” the analyst wrote. “In Q3, significant customer inventory reductions started to manifest, and the company is expecting an even greater impact in its Q4."

Needham

“MRVL's F3Q23 results were in line with expectations, but the company guided well below consensus,” Bolton said in a note. “Management emphasized throughout the call the impact inventory corrections are having on several end markets, which is expected to last multiple Qs,” he added.
“Despite the challenges, new product ramps and strength across DC, 5G, and Auto will enable MRVL to remain resilient over FY24,” the analyst wrote.

Rosenblatt Securities

“Marvell’s inline-ish October quarter was overshadowed by a January quarter guide (down nearly 10% q/q), as the datacenter Storage segment (1/3 of that business) falls to significant inventory resets and China enterprise tanks (merchant silicon),” Mosesmann stated.
“Marvell’s data center compute, networking, 5G wireless, auto/industrial remain strong areas entering the new year,” he added.

KeyBanc Capital Markets

“MRVL reported F3Q results that were slightly below and guided F4Q meaningfully lower with revs expected to decline 9% q/q,” Vinh said in a note.
“We're disappointed with these results but continue to have conviction in LT secular growth opportunities for MRVL in 5G, cloud, and auto,” he added.

Raymond James

“The company followed suit of others in the industry and guided for a hard reset, though this shortfall is largely related to weakness and inventory overhang in the Storage market,” Fairbanks said.
“The drivers of the shortfall were a point of concern on the call, though we believe specific business trends are generally consistent with end market demand signals,” she further wrote.

MRVL Price Action: Shares of Marvell Technology declined by 7.11% to $42.17 at the time of writing on Friday.