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On Tuesday, Stifel analysts maintained a Buy rating on Marvell Technology Group Ltd (NASDAQ:MRVL) with a steady price target of $115.00. According to InvestingPro data, the stock appears slightly undervalued at its current price of $55.46, with 20 analysts recently revising their earnings estimates upward for the upcoming period. The firm's analysts highlighted the company's recent announcement of the sale of its Automotive Ethernet business to Infineon (OTC:IFNNY). The deal, which was disclosed after the market closed on April 7th, involves an all-cash transaction valued at $2.50 billion, expected to be finalized within the calendar year 2025. For context, this represents a significant portion of Marvell's current market capitalization of $48.05 billion.
The transaction is based on approximately a 10 times revenue multiple, considering Marvell's forecasted fiscal year 2026 Automotive revenue to be in the range of $225 million to $250 million. Analysts at Stifel regard the sale as a strategic move for both Marvell and Infineon, emphasizing Marvell's evolution into a prominent data infrastructure solutions provider. The Automotive Ethernet business is considered a non-core asset for Marvell, contributing less than 5% of its total revenue by Stifel's estimates.
Stifel analysts have chosen not to alter their financial estimates for Marvell at this juncture. However, they noted that Marvell plans to provide further details and discuss the broader implications of the sale during its upcoming earnings call on May 29th. The analysts also pointed out that Marvell's balance sheet is expected to be significantly bolstered by the influx of cash from this transaction. With these considerations in mind, Stifel reaffirms its Buy rating on Marvell stock. InvestingPro analysis reveals that Marvell operates with a moderate level of debt and is expected to return to profitability this year. For deeper insights into Marvell's financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Marvell Technology has announced the sale of its Automotive Ethernet business to Infineon Technologies for $2.5 billion in cash. This transaction is expected to close in 2025 and is projected to generate $225-250 million in revenue for fiscal 2026. The divestiture aligns with Marvell's strategic focus on its core data infrastructure operations, which currently account for 75% of its sales. Analysts from Stifel and Raymond (NSE:RYMD) James view this sale as a positive move, with Stifel maintaining an Overweight rating and a $125 price target, while Raymond James reiterated an Outperform rating with a $110 target. Both firms highlight the favorable transaction valuation and its minimal impact on Marvell's top-line growth and profit margins.
Additionally, Marvell has introduced its new 1.6T and 800G Active Electrical Cable DSPs for data centers, responding to the rising demand for AI, machine learning, and cloud computing services. These advancements are expected to enhance data center performance and efficiency, with the market for AEC silicon projected to grow significantly. Marvell's collaboration with partners like 3M, Amphenol (NYSE:APH), and TE Connectivity (NYSE:TEL) underscores strong industry support for these innovations. The company continues to emphasize its role in data infrastructure technology, aiming to meet future technological demands through strategic initiatives and partnerships.
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