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On Thursday, Melius Research downgraded Marvell Technology Group Ltd . (NASDAQ:MRVL) stock from Buy to Hold, maintaining a price target (PT) of $66. Ben Reitzer, an analyst at Melius, cited a reassessment of the investment thesis, acknowledging that the expected positive outcomes have not materialized as anticipated. According to InvestingPro data, Marvell currently trades at $60.11, with analysts maintaining a strong buy consensus and price targets ranging from $60 to $135.
The analyst noted that while they are not predicting a significant downside for Marvell stock, which has already seen a 45.5% decline year-to-date (YTD) and a 34.9% drop over the past six months according to InvestingPro data, there is a possibility that the shares might not perform as well as other semiconductor and hardware stocks through the remainder of 2025 and into 2026. The downgrade reflects a cautious stance, suggesting that the stock might remain rangebound without significant performance gains. InvestingPro subscribers have access to 12 additional key insights about Marvell’s market position and future prospects.
Reitzer’s initial investment thesis hinged on three main factors: an anticipated rise in quarterly earnings in the calendar year 2025 driven by custom silicon momentum, potential growth in 2026-2028 from custom accelerators for Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT), and enhanced visibility and upside from an analyst day scheduled for June 2025 that was expected to reveal a larger total addressable market (TAM) for custom silicon and customer momentum.
However, the analyst pointed out that each element of the thesis has shown real flaws, prompting the decision to revise their rating. Although there is potential growth in Marvell’s optical AI business, which accounts for about 20% of sales, and some benefits may have been derived from tariff-related demand, the anticipated catalysts have not provided the expected boost to the company’s outlook. Despite current challenges, InvestingPro data shows analysts expect 42% revenue growth in FY2026, suggesting potential long-term value in the AI segment.
Reitzer emphasized that Melius’ price target for Marvell remains unchanged at $66, and their estimates have not been adjusted further, as they had already been reduced several times throughout the year. This statement suggests that while the firm’s outlook on Marvell has become more conservative, their valuation of the company’s stock remains consistent with prior assessments. Based on comprehensive analysis available through InvestingPro’s Fair Value model, Marvell appears slightly undervalued at current levels. Discover detailed valuation metrics and 14 additional key insights about Marvell in the exclusive Pro Research Report, part of the extensive analysis available for 1,400+ top US stocks.
In other recent news, Marvell Technology has refined its revenue forecast for the first quarter of fiscal year 2026, projecting net revenue to be around $1.875 billion with a narrowed guidance range of +/- 2%. This revision comes amid challenging macroeconomic conditions, prompting the company to postpone its Investor Day to 2026. Marvell also announced a webinar scheduled for June 17, 2025, to discuss advancements in its custom AI infrastructure ASIC business, a rapidly expanding segment for the company. Additionally, Stifel maintains a Buy rating on Marvell with a price target of $80, while Morgan Stanley (NYSE:MS) holds an Equalweight rating with a $90 price target, acknowledging the complexity of switching vendors for Marvell’s custom silicon projects. In a separate development, Marvell is set to reshuffle its board leadership with Brad Buss succeeding Michael Strachan as Lead Independent (LON:IOG) Director following the annual stockholders’ meeting in June 2025. This leadership change comes as long-serving directors Michael Strachan and Robert Switz have opted not to seek reelection. These developments reflect Marvell’s ongoing strategic adjustments and focus on its AI technology initiatives.
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