Marvell Technology beat revenue and earnings estimates for its latest quarter, yet the stock sank around 8% in premarket trading. Five major banks kept buy or buy-equivalent ratings on the semiconductor designer regardless, pointing to an early-October analyst day as the next catalyst.
Marvell Technology's stock fell around 8% in premarket trading even after the company posted $2.74 billion in revenue for the quarter, edging past the $2.72 billion analysts polled by FactSet had expected. The chipmaker also reported earnings of 94 cents per share, just above the Street's consensus estimate of 93 cents.
Banks stay bullish despite the sell-off
Bank of America, UBS, Barclays, Wells Fargo and Citi all reiterated buy or buy-equivalent ratings on Marvell after the report. BofA analyst Vivek Arya kept a $365 price target on the stock, implying 51% upside. UBS held a $310 target for 28% upside, while Barclays and Citi both kept $275 targets. Wells Fargo maintained a $310 target as well.
According to CNBC: "We ignore this expectation mismatch", Arya wrote, arguing Marvell is positioned to accelerate revenue growth as its compute, networking, optics, security and storage business expands, driven by a diversity of cloud customers.
A high bar set by the Google deal
Expectations for the quarter were unusually high because Marvell revealed last week that it would allow Google to buy up to $12.2 billion of its shares. The stock has also climbed 184% this year heading into the report, raising the bar investors measured the results against.
Morgan Stanley's Joseph Moore, who holds an equal-weight rating on Marvell, said he would be tactically long the stock into the company's investor day if shares sell off. He said the expectations miss was set up by the size and scale of the Google partnership being mostly contemplated already in fiscal 2028 guidance, but that longer-term trends still support enthusiasm heading into the analyst day in early October.
Source: CNBC
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