A lackluster earnings report lowers Marvell’s stock offering the lowest wins.
Marvell Technology (NASDAQ:MRVL)
Even though Wall Street analysts observed that the business’s long-term potential is still in place, Marvell Technology (NASDAQ:MRVL) stock slumped on Friday after the semiconductor manufacturer released results and projections that came up just short of expectations.
The second-quarter results were “solid… all things considered,” according to Morgan Stanley analyst Joseph Moore, who rates Marvell (MRVL) at equal weight. However, he added that certain trends in the data center industry were worrying because the sector has been a pillar amid slowing consumer tech spending.
In a note to clients, Moore stated that “we had expected a mixed quarter, given inventory excess in hard disk drive and networking, with supply/demand approaching equilibrium in those markets, and we expected the cloud to be strong.” Moore also stated that the overall numbers largely match what was anticipated but with a slightly different composition.
Moore also noted that while lead times are decreasing and supply-chain concerns are still being resolved, new difficulties have recently arisen, particularly in the data center, mostly as a result of supply.
According to Moore, “our overall expectation is that hyper scale can restart growth next year, albeit more slowly, while there will still be some headwinds on the on-premise side. As we have observed in consumer markets (where smartphone and PC decelerations began as a supply problem), it can be difficult to separate supply and demand difficulties at this point. In premarket trading, Marvell (MRVL) shares decreased 3.5% to $53.08.
Ross Seymore, an analyst at Deutsche Bank, noted that while the results were bumpy, the company’s growth is still viewed as “compelling” and has a buy rating with a $65 price objective on Marvell (MRVL).
Approximately 90% of Marvell’s (MRVL) revenue would come from data infrastructure sectors, which Seymore predicted would eventually “substantially lessen its volatility.”
Additionally, investors should “feel confident” that Marvell (MRVL) can deliver the growth required for investors from both a fundamental and valuation standpoint in light of new design wins that will begin early in the following year, including more than $400M in cloud data center products and ongoing growth in 5G and the auto industries.
In a statement made last week ahead of earnings, Wells Fargo noted that Marvell Technology’s (MRVL) backlog may have reached a peak and that the business is “not immune” to macroeconomic headwinds.
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Author Jowi Kwasu