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Marvell Technology Inc MRVL

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Morningstar’s Analysis

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Marvell Finishes Off Fiscal 2021 With Promise; Raising FVE to $35; Shares Overvalued

Abhinav Davuluri, CFA Sector Strategist

Analyst Note

| Abhinav Davuluri, CFA |

Marvell Technology reported fourth-quarter results consistent with our expectations. The firm’s sales were buoyed by continued strength witnessed in its key growth initiatives, including cloud, automotive, and 5G products. Marvell’s storage business also closed out a strong quarter, with revenue from this segment outpacing our estimate. We continue to see Marvell as well-placed to capitalize on secular trends in 5G, automotive, data infrastructure, and cloud computing to grow their business. Management did not provide any additional color on Marvell’s upcoming acquisition of Inphi. Still, we continue to view this acquisition as value-accretive as it bolsters the company’s position in the cloud and 5G space. Due to the time value of money following our valuation model roll, we are raising our fair value estimate for no-moat Marvell to $35 per share from $30 per share. Although shares were down 6% during after-hours trading (likely due to relatively tame guidance), we recommend investors wait for more of a pullback before committing capital to the name.

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Company Profile

Business Description

Marvell Technology Inc designs integrated circuits primarily for data storage, networking, and communications. Historically, the firm focused on storage, where it is still a key supplier to hard-disk drive and solid-state drive makers but has strategically emphasized networking to offset declining HDD technology. The firm has since diversified via acquisitions and supplies chips to the networking and consumer electronic spaces. Marvell outsources its production to third-party foundries.

31 Victoria Street, Victoria Place, 5th Floor
Hamilton, HM 10
T +1 441 294-8000
Sector Technology
Industry Semiconductors
Most Recent Earnings Jan 31, 2021
Fiscal Year End Jan 29, 2022
Stock Type Cyclical
Employees 5,340