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On Friday, Stifel maintained a positive outlook on Marvell (NASDAQ:MRVL) Technology Group Ltd. (NASDAQ:MRVL), raising its price target on the stock to $95 from the previous $90 while keeping a Buy rating. The firm's analyst cited Marvell's second-quarter results which surpassed the midpoint expectations, with revenue increasing by 1.8% over their estimates and non-GAAP earnings per share (EPS) being $0.01 higher.
Marvell's Data Center and Artificial Intelligence (DC/AI) segment was highlighted as the main driver of the company's revenue acceleration, while other end markets have reportedly reached a cyclical low in the first half of fiscal year 2025. The improved outlook for the October quarter, which is projected to be 3.6% higher than Stifel's estimates, is primarily attributed to the DC/AI segment, along with sequential recoveries in the Carrier Infrastructure and Enterprise Networking sectors.
The analyst also pointed to Marvell's custom silicon products, which are expected to support significant revenue growth, noting that the company's first two chips are ramping into volume production. Based on these developments, Stifel believes Marvell is on track to exceed its previously issued revenue guidance for fiscal years 2025 and 2026 in the AI space, which are estimated at $1.5 billion and $2.5 billion respectively.
Stifel's continued endorsement of Marvell as a Select List pick comes with the revised 12-month price target of $95, which is based on a 12.0x calendar year 2025 enterprise value to sales multiple. The firm remains impressed with Marvell's execution within the DC/AI space, noting that even as the company's other end markets begin to show sequential growth, they still remain below true consumption levels.
In other recent news, Marvell Technology Group Ltd . has reported impressive Q2 fiscal year 2025 financial performance, with revenue figures exceeding expectations at $1.27 billion. Much of this success is attributed to the data center end market, which reported a record revenue of $881 million.
On the analyst front, Piper Sandler maintained an Overweight rating on Marvell with a price target of $100, while Rosenblatt Securities raised its target from $100 to $120, maintaining a Buy rating. Citi also maintained a Buy rating, reflecting the company's performance above 2025 earnings per share consensus.
Marvell is expected to leverage robust investments in artificial intelligence (AI) by scaling its AI application-specific integrated circuit (ASIC) business. Analysts from Rosenblatt introduced a fiscal year 2027 Non-GAAP earnings estimate of $3.50 per share for Marvell, reflecting confidence in the company's growth trajectory.
Other recent developments include Marvell's plans to increase stock repurchases in the third quarter. Marvell's management has expressed confidence in a base gross margin of over 61% being sustainable in the long term, underpinned by the anticipated concurrent expansion of the merchant business.
InvestingPro Insights
Marvell Technology Group Ltd. (NASDAQ:MRVL) has been under the investor's microscope, and recent data from InvestingPro provides a deeper dive into the company's financial health and market performance. With a market capitalization of $60.45 billion, Marvell has been trading at a high revenue valuation multiple, which aligns with Stifel's optimistic price target adjustment. Despite a negative revenue growth rate over the last twelve months, at -7.72%, analysts are anticipating a turnaround, as evidenced by 18 analysts revising their earnings upwards for the upcoming period, a key InvestingPro Tip that underscores confidence in Marvell's future profitability.
Another InvestingPro Tip to consider is Marvell's consistent dividend payments over the last 13 years, which may appeal to income-focused investors, especially in light of a dividend yield of 0.34% as of the last recorded date. The company's liquid assets also exceed its short-term obligations, suggesting financial resilience and a capacity to navigate market uncertainties. For those interested in a more comprehensive analysis, InvestingPro offers additional tips on Marvell, which can be found at InvestingPro's Marvell page.
With the next earnings date set for November 28, 2024, and a fair value estimate of $90 by analysts, Marvell's stock appears to be a subject of growing interest. The InvestingPro Fair Value, however, is slightly lower at $66.78, indicating that investors may want to keep a close eye on the stock's performance relative to market expectations. For those seeking further insights, there are more than 10 additional InvestingPro Tips available, which could guide investors in making a more informed decision about Marvell's stock.
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