Analyst Note| Abhinav Davuluri, CFA |
Marvell Technology kicked off fiscal 2022 with the company’s revenue growing at a healthy clip and clocking in above management’s guidance and our expectations. The firm’s sales were buoyed by continued strength witnessed in the networking and storage segments. We continue to see Marvell as well-placed to capitalize on secular trends in 5G, automotive, data infrastructure, and cloud computing to grow its business. We also view Marvell’s acquisition of Inphi as value-accretive as it enhances the company’s position in the data center space, the firm’s largest vertical by revenue. We will incorporate the firm’s strong guidance along with a modest increase in our midcycle growth assumptions, and we expect to raise our fair value estimate for no-moat Marvell by about 15%-20%. However, with shares up 5% during after-hours trading in the $50 range, we recommend investors wait for a pullback before committing capital to the name.