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

Zinger Key Points
  • Customer inventory reductions may have an even greater impact in the fourth quarter, one analyst said.
  • New product ramps and strength in DC, 5G and Auto could keep Marvell Technology resilient in fiscal 2024, another analyst stated.

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.

Check out other analyst stock ratings.

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.

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Posted In: Analyst ColorEarningsNewsPrice TargetReiterationTop StoriesAnalyst RatingsMoversTrading IdeasBenchmarkCody AcreeHans MosesmannJohn VinhKeyBanc Capital MarketsMelissa FairbanksNeedhamQuinn BoltonRaymond JamesRosenblatt Securities
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