On Wednesday, BofA Securities expressed a positive outlook on Marvell Technology (NASDAQ:MRVL), raising its price target to $125 from $108, while reiterating a Buy rating on the stock. The company, currently trading near $96 and sporting a market capitalization of $83 billion, has shown remarkable momentum with an 85% return over the past year according to InvestingPro data.
The firm's analyst highlighted Marvell's significant exposure to the data center sector and its positioning in AI electro-optics and custom chips as key drivers for the company's expected annual earnings per share (EPS) growth of approximately 40-50% in the coming years.
The analyst projects that Marvell's EPS could reach between $4 and $5 by the calendar year 2027. Following Marvell's recent financial performance, which exceeded expectations and included upward revisions, BofA Securities has increased its forecasts for the company's pro forma EPS in fiscal years 2025, 2026, and 2027 (corresponding to calendar years 2024, 2025, and 2026) by 6%, 10%, and 13% to $1.56, $2.72, and $3.52, respectively. InvestingPro analysis reveals that while the company isn't currently profitable, analysts expect positive earnings this year, with an EPS forecast of $1.47 for fiscal 2025.
The revised price objective of $125 is based on a price-to-earnings (PE) multiple of 46 times the estimated earnings for the calendar year 2025, which is consistent with the company's growth rate and the valuation range of its peers. The average PE multiple for the peer group stands at 49 times, with a median of 39 times for the calendar year 2025.
In addition, Marvell's CEO has confirmed his commitment to the company, addressing and dismissing rumors about potential external opportunities. Despite some concerns about gross margin (GM) pressures due to a shift towards custom chips, BofA Securities anticipates that the overall impact will be beneficial to Marvell's operating income and EPS.
According to InvestingPro, which offers comprehensive analysis of over 1,400 US stocks, Marvell maintains a "Fair" overall financial health score, with particularly strong price momentum metrics. The company's current gross profit margin stands at 44.15%, and it operates with a moderate level of debt, suggesting room for strategic growth initiatives.
In other recent news, Marvell Technology Group Ltd (NASDAQ:MRVL). has seen a series of price target upgrades from several firms, reflecting a positive financial outlook. Wolfe Research raised its target to $130 from $90, citing Marvell's strong revenue growth and exposure to the AI data center sector. Similarly, Stifel increased its target to $125 from $114, highlighting Marvell's data center and AI revenue growth. Rosenblatt also raised its target to $140, buoyed by the company's strong October quarter earnings and robust demand in data center and AI.
JPMorgan maintained its Overweight rating on Marvell and increased its price target to $130 from $90, following the company's robust October-quarter performance, particularly in its data center business. The firm also noted Marvell's significant increase in production shipments of its AI ASICs, with notable developments in its partnerships with Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOGL).
Lastly, Raymond (NS:RYMD) James raised its price target on Marvell to $120 from $90, following the company's impressive third-quarter results and fourth-quarter outlook. The firm highlighted a significant increase in custom silicon projects, particularly with Amazon Web Services (AWS), along with ongoing success in the Optical connectivity sector.
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