Analyst Note| William Kerwin |
We are raising our fair value estimate for no-moat Marvell Technology to $50 per share from $40 after its 2021 investor day led us to raise our revenue growth expectations. Management didn’t introduce any brand-new technology during its presentations, but raised its long-term financial model targets due to design wins accreting material revenue faster than previously expected. We view Marvell as an agnostic play on the broad cloud data infrastructure market, resulting from a five-year pivot away from consumer applications. Excluding inorganic contributions from Inphi and Innovium in fiscal 2022 and 2023, we now think Marvell can sustain organic compound annual sales growth close to 20% through fiscal 2026. We maintain our expectations for the firm to steadily expand profitability throughout our forecast, eventually surpassing 40% non-GAAP operating margin. The market reacted positively to the investor day, and despite our more bullish expectations, we continue to view shares as overvalued.