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Investing.com - Marvell (NASDAQ:MRVL), a prominent semiconductor company with a market capitalization of $67.2 billion, saw its shares fall by more than 11% in after-hours trading following the company’s second consecutive quarter of disappointing results and guidance. Despite the setback, Benchmark maintained its Buy rating and $95.00 price target on the stock, aligning with the broader analyst consensus that remains bullish. According to InvestingPro data, analyst price targets suggest up to 17% potential upside from current levels.
The semiconductor company is experiencing near-term inventory digestion at what is believed to be its lead custom-silicon hyperscale customer, Amazon. According to Benchmark, this customer’s efforts to fully utilize previously shipped product volumes is expected to take approximately 45-60 days, with volume deliveries anticipated to resume in the fourth quarter. Despite these challenges, InvestingPro analysis indicates strong fundamentals, with revenue growing 37% year-over-year and the company maintaining healthy liquidity with a current ratio of 1.88.
This inventory absorption is projected to cause a sequential decline in Marvell’s Custom Compute business for Q3, though this is expected to be offset by continued growth in its Electro-Optics business. The company has guided for flat sequential Data Center performance in the October period.
Despite the temporary pause in Data Center growth, Marvell is still delivering strong annual numbers, with its Data Center business up 69% year-over-year in the July period. Even with flat sequential performance, the company anticipates 35% annual growth in Q3 for this segment.
Benchmark noted that Marvell’s sequential trends for FY26 thus far show Q1 up 5.5%, Q2 up 3.5%, and Q3 now guided flat, following a period of unusually strong growth through the second half of last year when Data Center revenue grew at a mid-20% sequential pace in both Q3 and Q4. Looking ahead, InvestingPro forecasts indicate continued growth potential, with analysts expecting the company to return to profitability this year. For deeper insights into Marvell’s growth trajectory and 13 additional exclusive ProTips, explore the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Marvell Technology reported its fiscal second-quarter results, which aligned with expectations, but its guidance for the third quarter fell short of consensus revenue estimates. The company projected revenue of $2.06 billion for the upcoming quarter, below the anticipated $2.11 billion, though it slightly exceeded earnings per share forecasts with a projection of $0.74 compared to the expected $0.72. Rosenblatt lowered its price target for Marvell to $95, citing delays in ASIC production, yet maintained a Buy rating. KeyBanc reiterated an Overweight rating with a $90 price target despite Marvell’s data center segment missing expectations. Melius Research adjusted its price target to $70, maintaining a Hold rating due to concerns about AI growth affecting Marvell’s third-quarter guidance. Needham also lowered its price target to $80, while keeping a Buy rating, following Marvell’s in-line second-quarter results and anticipated decline in custom silicon revenue. Cantor Fitzgerald maintained a Neutral rating with a $75 price target, reflecting a mixed outlook for Marvell. These developments reflect a range of analyst perspectives on Marvell’s financial trajectory.
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