According to Loop Capital analyst Gary Mobley, investors should view this decline of Marvell Technology Inc. (NASDAQ: MRVL), following its recent earnings announcement this morning, as an opportunity for a discount on a high-quality name.
The semiconductor giant announced on Thursday that it had surpassed Street expectations for its fourth-quarter results and provided a positive outlook for the future.
Marvell’s stock fell as much as 20 percent today, prompting Mobley raise his rating to “buy”, with a potential upside of $110 indicating a gain greater than 50 percent from the current level.
What caused the Marvell stock to crash?
Marvell’s shares have fallen this morning, mainly because investors expected more of the company which makes AI custom products for Amazon Web Services.
They hoped that working with AMZN, the tech giant, would result in an even bigger financial boost in its fourth quarter, as AMZN has committed billions of dollars to AI infrastructure in this year.
According to Loop Capital’s analyst, while the revenue benefit may not have been as great as shareholders hoped, the growth at MRVL is “clearly being driven by AI/cloud”.
Mobley, in his research note recommended investors take advantage of the current selloff as the artificial intelligence is expected to remain an important tailwind moving forward for semiconductor stocks.
Marvell stock on the decline: a good investment?
Marvell stock’s decline, despite its strong performance and guidance that was better than expected, may have been a blessing for investors. The Wilmington-based firm is still a major supplier of Amazon custom AI chips.
Blayne C. Curtis, a Jefferies Analyst said in a Thursday research note that there is still a lot of upside for Marvell if it retains the [Amazon] Trainium contract.
The Nasdaq listed firm’s risk/reward ratio is also now more attractive. Marvell Technology shares are currently down by more than 40 percent compared to their highs for the year.
Marvell’s stock, which pays out a current dividend yield of 0.32 percent to investors is another reason why you should have this in your portfolio.
Marvell Q4 Earnings Highlights
Marvell’s fourth quarter financial report showed a 60-cent share for $1.82billion in revenues. Comparatively, analysts were at $1.80bn and 59c per share.
Analysts had predicted $1.87 billion for the first quarter, but it was a bit more than that.
Matt Murphy, chief executive of the company, said in the release:
We have seen a strong increase in our interconnect product sales. “We expect strong revenue growth in the entire year.”
Murphy also said that as the year progresses, he anticipates an even bigger revenue boost from Amazon. Marvell’s stock has risen more than 30 percent since its 52-week bottom at the time of writing, despite today’s drop.
This post Marvell Stock Price Analysis after Q4 Earnings: Buy the Dip? The post Marvell stock price analysis after Q4 earnings: buy the dip?
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