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On Thursday, Citi analysts revised their outlook on Marvell Technology (NASDAQ:MRVL), reducing the price target from $136.00 to $122.00, while still recommending a Buy rating on the shares. The adjustment follows Marvell’s recent financial report, which showed earnings per share (EPS) modestly above the expectations for January and the upcoming April quarter. According to InvestingPro data, Marvell, currently valued at $78 billion, trades at high EBITDA and revenue multiples, suggesting premium pricing despite recent adjustments.
Marvell’s stock experienced a 15% decline after the earnings report, which Citi attributes to two primary factors. Firstly, higher market expectations were evident from the 15% premium on the stock price from ASIC to GPU. Secondly, Datacenter sales showed a 24% quarter-over-quarter increase in January, and are projected to rise in the mid-single digits, with cloud and AI sales expected to grow around 10% quarter-over-quarter in the April quarter. Despite recent volatility, InvestingPro data shows the stock has gained over 36% in the past six months, with revenue growing at 4.71% year-over-year.
The management team at Marvell has conveyed confidence in the ramp-up of custom ASIC products for both Tier 2 customers this year and the next-generation Tier 3 customers next year. In response to these developments, Citi has adjusted its EPS projections for calendar years 2025 and 2026, decreasing them by 12% and 11% year-over-year, respectively. The new price target of $122 is based on a consistent 35x price-to-earnings (P/E) ratio applied to the discounted EPS forecast for calendar year 2026. Despite the reduced price target, Citi maintains its Buy rating on Marvell stock. For deeper insights into Marvell’s valuation and growth prospects, including 10+ additional ProTips and comprehensive financial analysis, check out the detailed Pro Research Report available on InvestingPro.
In other recent news, Marvell Technology Inc. reported its Q4 FY2025 earnings, surpassing analyst expectations with an earnings per share (EPS) of $0.60 compared to the forecasted $0.59. The company also exceeded revenue forecasts, reporting $1.82 billion against the anticipated $1.80 billion. Despite these positive results, Wolfe Research adjusted its outlook on Marvell, reducing the price target from $130.00 to $115.00, while maintaining an Outperform rating. This revision came after concerns about Marvell’s market position, which the company addressed during its earnings call by confirming ongoing engagements with a key customer for next-generation XPU production. Marvell’s revenue from custom XPUs is expected to increase in the fiscal years 2026 and 2027, with significant growth in AI-related revenues, which now constitute the majority of its data center revenue. The company forecasts Q1 FY2026 revenue of $1.875 billion, with expectations that AI revenue will significantly exceed $2.5 billion. Marvell also announced technological advancements, including the demonstration of the industry’s first two-nanometer silicon IP, which is crucial for developing next-generation AI and cloud infrastructure.
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