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.