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On Friday, Morgan Stanley (NYSE:MS) maintained an Equalweight rating on Marvell Technology Group Ltd . (NASDAQ:MRVL) and increased its price target from $70.00 to $73.00. The research firm’s analyst cited a positive outlook for the company’s long-term performance despite recent underwhelming results. The adjustment in the price target reflects a slightly higher modelled earnings per share (EPS) for the upcoming years. According to InvestingPro data, Marvell’s stock has experienced significant volatility, with a 31% decline over the past six months, though analysts maintain a bullish consensus with price targets ranging from $60 to $135.
Marvell has faced challenges with expectations this year, including the recent quarter’s performance. However, the analyst noted that the issues surrounding the Trainium 2 expectations have been resolved. Looking ahead, the sequential progression of the company’s financials is anticipated to be strong, with InvestingPro forecasting 42% revenue growth for the upcoming fiscal year. Marvell is considered to be a long-term winner in the AI sector, with particular emphasis on the optical segment over the ASIC portion due to its higher defensibility and margin. The company maintains a healthy current ratio of 1.54 and operates with a moderate debt level.
An opportunity for Marvell’s stock to rebound is foreseen around its upcoming AI event, which has been restructured from an analyst day to a webinar focused on AI ASIC opportunities. This event is expected to address investor concerns, which have grown more cynical recently. The analyst expects the company’s financial figures to be satisfactory.
Morgan Stanley’s revised price target is based on a multiple of 32 times the calendar year 2026 modelled EPS of $2.28, which includes stock-based compensation. This represents about 23 times the non-GAAP EPS. The firm’s valuation multiple remains unchanged, but the modelled EPS has been increased from $2.20 to $2.28. With a market capitalization of $55 billion and trading slightly below its Fair Value according to InvestingPro analysis, Marvell presents an interesting opportunity for investors seeking exposure to the AI sector. For deeper insights into Marvell’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
The analyst highlighted a preference for other companies in the AI space, such as Nvidia (NASDAQ:NVDA), Broadcom Inc. (NASDAQ:AVGO), and Analog Labs (ALAB), but still recognizes Marvell’s potential. The updated price target is a reflection of the firm’s confidence in Marvell’s ability to navigate its current challenges and capitalize on future growth opportunities.
In other recent news, Marvell Technology Inc. reported its first-quarter financial results for fiscal year 2026, exceeding both earnings and revenue projections. The company recorded earnings per share of $0.62, slightly above the anticipated $0.61, and generated revenue of $1.9 billion, surpassing the expected $1.88 billion. Marvell’s revenue grew by 63% year-over-year, bolstered by strong demand in the AI and data center markets. Additionally, Marvell announced a significant transaction involving the sale of its Automotive Ethernet business to Infineon (OTC:IFNNY) for $2.5 billion in cash, expected to close within 2025. The company also partnered with NVIDIA and launched new technologies, further expanding its strategic initiatives. Analysts noted Marvell’s optimistic guidance for the second quarter, projecting revenue of $2 billion. Despite these positive developments, Marvell’s stock experienced a decline in after-hours trading, attributed to broader market trends and investor concerns about future growth.
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