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On Friday, Wolfe Research made adjustments to its outlook on Marvell Technology Group Ltd . (NASDAQ:MRVL), lowering the price target on the company’s stock to $90 from the previous $115. Despite the reduction, the firm maintained its Outperform rating on the shares. The stock currently trades at $63.73, with analyst targets ranging from $60 to $135. According to InvestingPro data, the stock has experienced significant volatility, falling over 31% in the past six months.
Chris Caso, an analyst at Wolfe Research, cited the new price target is based on approximately 24 times the firm’s fiscal year 2027 earnings per share (EPS) estimate of $3.74. This multiple is slightly below Marvell’s average multiple of 25 times over the past three years. While management is confident in growing their custom business through fiscal year 2026, concerns persist about parallel project impacts. InvestingPro analysis shows Marvell currently trades at a high EBITDA multiple of 43.3x, reflecting market optimism about future growth potential. Get access to 10+ additional ProTips and comprehensive valuation metrics with InvestingPro.
The parallel project involves Alchip and Amazon (NASDAQ:AMZN)’s internal design team, which could potentially affect Marvell’s revenue. Investors are curious about how this development could influence the valuation multiple assigned to Marvell’s revenue.
Despite these concerns, Wolfe Research remains optimistic about Marvell’s prospects. The firm acknowledged signs of recovery in Marvell’s cyclical business and strength in the optical segment. The key factor that Wolfe Research believes will drive the stock’s performance is convincing investors of the long-term viability of Marvell’s artificial intelligence (AI) businesses, especially in custom silicon.
Marvell has an opportunity to address these investor concerns and demonstrate the sustainability of its AI business at the upcoming custom AI event scheduled for June 17, 2025. The event could provide a platform for the company to showcase its strategies and potentially reassure stakeholders about its growth trajectory in the custom silicon sector.
In other recent news, Marvell Technology Group Ltd. reported its first-quarter financial results for fiscal year 2026, exceeding both earnings and revenue expectations. The company posted earnings per share of $0.62, slightly above the forecast of $0.61, and revenue of $1.9 billion, surpassing the expected $1.88 billion. Despite the positive performance, Marvell’s stock experienced a decline in after-hours trading. Analysts from KeyBanc, Evercore ISI, and Raymond (NSE:RYMD) James adjusted their price targets for Marvell, with KeyBanc and Raymond James lowering their targets to $90 while maintaining positive ratings, and Evercore ISI slightly reducing its target to $133, also maintaining a positive outlook. Morgan Stanley (NYSE:MS), however, increased its price target to $73, citing a positive long-term outlook for the company. Marvell’s Data Center business showed significant year-over-year growth, driven by strong demand in AI and data center markets. The company also announced ongoing strategic engagements with major partners like Amazon and Microsoft (NASDAQ:MSFT), which analysts view as positive signals for Marvell’s future prospects. Additionally, Marvell is preparing for a virtual AI event on June 17, 2025, to discuss its AI initiatives and developments further.
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